<DOC>
[109 Senate Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:27147.wais]
S. Hrg. 109-323, Pt. 3
Senate Hearings
Before the Committee on Appropriations
_______________________________________________________________________
Agriculture, Rural
Development, and Related
Agencies Appropriations
Fiscal Year
2007
109th CONGRESS, SECOND SESSION
H.R. 5384
PART 3
DEPARTMENT OF AGRICULTURE
DEPARTMENT OF HEALTH AND HUMAN SERVICES
NONDEPARTMENTAL WITNESSES
Agriculture, Rural Development, and Related Agencies Appropriations,
2007
(H.R. 5384)--Part 3
S. Hrg. 109-323, Pt. 3Sec.
AGRICULTURE, RURAL DEVELOPMENT, AND RELATED AGENCIES APPROPRIATIONS FOR
FISCAL YEAR 2007
=======================================================================
HEARINGS
before a
SUBCOMMITTEE OF THE
COMMITTEE ON APPROPRIATIONS UNITED STATES SENATE
ONE HUNDRED NINTH CONGRESS
SECOND SESSION
on
H.R. 5384
AN ACT MAKING APPROPRIATIONS FOR AGRICULTURE, RURAL DEVELOPMENT, FOOD
AND DRUG ADMINISTRATION, AND RELATED AGENCIES PROGRAMS FOR THE FISCAL
YEAR ENDING SEPTEMBER 30, 2007, AND FOR OTHER PURPOSES
__________
PART 3
Department of Agriculture
Department of Health and Human Services
Nondepartmental Witnesses
__________
Printed for the use of the Committee on Appropriations
Available via the World Wide Web: http://www.gpoaccess.gov/congress/
index.html
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__________
COMMITTEE ON APPROPRIATIONS
THAD COCHRAN, Mississippi, Chairman
TED STEVENS, Alaska ROBERT C. BYRD, West Virginia
ARLEN SPECTER, Pennsylvania DANIEL K. INOUYE, Hawaii
PETE V. DOMENICI, New Mexico PATRICK J. LEAHY, Vermont
CHRISTOPHER S. BOND, Missouri TOM HARKIN, Iowa
MITCH McCONNELL, Kentucky BARBARA A. MIKULSKI, Maryland
CONRAD BURNS, Montana HARRY REID, Nevada
RICHARD C. SHELBY, Alabama HERB KOHL, Wisconsin
JUDD GREGG, New Hampshire PATTY MURRAY, Washington
ROBERT F. BENNETT, Utah BYRON L. DORGAN, North Dakota
LARRY CRAIG, Idaho DIANNE FEINSTEIN, California
KAY BAILEY HUTCHISON, Texas RICHARD J. DURBIN, Illinois
MIKE DeWINE, Ohio TIM JOHNSON, South Dakota
SAM BROWNBACK, Kansas MARY L. LANDRIEU, Louisiana
WAYNE ALLARD, Colorado
J. Keith Kennedy, Staff Director
Terrence E. Sauvain, Minority Staff Director
------
Subcommittee on Agriculture, Rural Development, and Related Agencies
ROBERT F. BENNETT, Utah, Chairman
THAD COCHRAN, Mississippi HERB KOHL, Wisconsin
ARLEN SPECTER, Pennsylvania TOM HARKIN, Iowa
CHRISTOPHER S. BOND, Missouri BYRON L. DORGAN, North Dakota
MITCH McCONNELL, Kentucky DIANNE FEINSTEIN, California
CONRAD BURNS, Montana RICHARD J. DURBIN, Illinois
LARRY CRAIG, Idaho TIM JOHNSON, South Dakota
SAM BROWNBACK, Kansas MARY L. LANDRIEU, Louisiana
ROBERT C. BYRD, West Virginia
(ex officio)
Professional Staff
Fitzhugh Elder IV
Hunter Moorhead
Stacy McBride
Dianne Preece
Galen Fountain (Minority)
Jessica Arden Frederick (Minority)
William Simpson (Minority)
Tom Gonzales (Minority)
C O N T E N T S
----------
Thursday, March 9, 2006
Page
Department of Agriculture: Office of the Secretary............... 1
Tuesday, March 14, 2006
Department of Health and Human Services: Food and Drug
Administration................................................. 133
Thursday, March 30, 2006
Department of Agriculture........................................ 297
Nondepartmental Witnesses........................................ 527
AGRICULTURE, RURAL DEVELOPMENT, AND RELATED AGENCIES APPROPRIATIONS FOR
FISCAL YEAR 2007
----------
THURSDAY, MARCH 9, 2006
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
The subcommittee met at 8:34 a.m., in room SD-192, Dirksen
Senate Office Building, Hon. Robert F. Bennett (chairman)
presiding.
Present: Senators Bennett, Bond, Burns, Craig, Kohl, and
Dorgan.
DEPARTMENT OF AGRICULTURE
Office of the Secretary
STATEMENT OF HON. MIKE JOHANNS, SECRETARY
ACCOMPANIED BY:
CHARLES CONNER, DEPUTY SECRETARY
KEITH COLLINS, CHIEF ECONOMIST
W. SCOTT STEELE, BUDGET OFFICER
opening statement of senator robert f. bennett
Senator Bennett. The subcommittee will come to order.
I will tell our witnesses and spectators, as well as
senators, that the full committee has a meeting scheduled at
9:30 to hear Secretary Rumsfeld and Secretary Rice discuss the
appropriations with respect to Katrina. So we will do our best
to be finished with this hearing in time to go to the full
committee for that hearing.
And we are grateful to Secretary Johanns for his
willingness to appear at this hour in the morning. There are
some senators who say it isn't even light yet at 8:30, and what
are we doing convening this early? But we are grateful, Mr.
Secretary, that you would meet our schedule with respect to
that, and we welcome you before the subcommittee.
This is the Secretary's second appearance before the
subcommittee, and we understand you celebrated your 1-year
anniversary as the Secretary in January.
And with you, we welcome Mr. Conner, Dr. Collins, and Mr.
Steele.
Before I speak about the specifics of USDA's budget
request, I would like, Mr. Secretary, to take the opportunity
to thank you and your Department for your efforts in the wake
of Hurricane Katrina.
Secretary Johanns. Thank you.
Senator Bennett. We have heard a great deal of criticism
about Katrina with respect to a number of other agencies, but
the work that was done by USDA employees in feeding and housing
thousands of people has gone unnoticed and unremarked upon in
the national media. So I want to take this occasion to
congratulate them through you for the work that all of your
employees did.
The Natural Resources Conservation Service and the Farm
Service Agency are working to restore watersheds and farms and
ranches throughout the region, which is vitally important.
On a personal note, I would also like to thank you for your
department's help in Utah, when we had a natural disaster.
January of 2005, just a little over a year ago, Washington
County experienced some of the worst flooding in its history.
And NRCS rose to the challenge. It has helped restore the
damage caused by those floods.
And then, particularly, I want to recognize the efforts of
Sylvia Gillen, one of your employees. She is the Utah State
Conservationist. And she has been creative and helpful and
responsive, and she does a great job for you, and she has done
a great job for the people of Utah. And we want to recognize
that.
Now the USDA request for the subcommittee is approximately
$15.6 billion, and this represents a 7 percent or $1.263
billion decrease from last year. We don't usually deal with
decreases around here, and these are the OMB numbers. We are
awaiting more information from CBO that might change these
numbers a little up or down, but basically, they will stay in
the same ballpark.
And quite frankly, Mr. Secretary, this is a fairly
significant hole that this subcommittee is going to have to try
to climb out of. The President's budget eliminates
approximately $378 million of Federal support for agriculture
research at the Nation's land grant colleges and universities,
as well as USDA's own in-house research agency. That is
something that concerns me. I am a strong supporter of research
and the value that we get for that long term.
Another $176 million is eliminated for conservation and
watershed projects throughout the country. And one of the
unfortunately standard budget tricks that every OMB, regardless
of who is President or regardless of which party controls it,
is in this budget. The budget includes $182 million in new user
fees, which are not likely to be enacted by the Congress, which
means we have got to find another $182 million in cuts to
offset that projected revenue increase.
Finally, funding is eliminated for the Grazing Lands
Conservation Initiative, housing for very low-income families,
and the Commodity Supplemental Food Program, among others. And
I am sure members of the subcommittee will raise these issues
with you this morning and give you the opportunity to talk
about that.
Now the budget does put an added emphasis on the Food and
Agriculture Defense Initiative and activities related to avian
flu, the highly pathogenic possible pandemic that we may be
facing.
So I will now turn to Senator Kohl, the Ranking Member.
Members will be able to submit questions for the record if they
are not here. And I will tell members through their staffs who
are here; we hope that all questions to the subcommittee can be
submitted by the close of business on Friday, March 17. And
then we will forward those to you, Mr. Secretary.
Senator Kohl.
Senator Kohl. I thank you, Mr. Chairman.
Secretary Johanns, we welcome you, and it is good to see
you again. Mr. Conner, Dr. Collins, and Mr. Steele, we also
extend our welcome to you.
Mr. Secretary, at the outset, I think it is important that
we recognize some of the very good work that you and the
Department have done this last year. By all reports, the USDA
response to the terrible storms in the Gulf Coast, especially
from your nutrition and rural development programs, was among
the very best in the Government.
Your quick action meant lives saved and families placed
firmly on the path toward recovery. So we congratulate you on
your good work. But we all know that there have been some
missteps at the Department over the past several months, which
have too often crowded out the good work that you have done.
Chairman Bennett and I face a tremendous challenge to craft
a bill under the current budget constraints. The President's
budget assumes too many unrealistic or unacceptable deficit
reduction measures. It assumes more than $300 million in
unauthorized user fees that Congress has rejected time and time
again, and it calls for the elimination of a small, but vital
feeding program for the elderly.
And although this is in the authorizing arena, the
President's proposal to tax dairy farmers in order to offset
tax breaks for multi-millionaires is not acceptable.
These are all topics we are likely to visit today, and I
look forward to your statement.
Mr. Chairman, I want to thank you and publicly state how
grateful I am for the relationship that you and I have
developed over the past 2 years on this subcommittee, and I
look forward to working with you.
Senator Bennett. Thank you very much.
I will echo the comments about the working relationship.
You and your staff have been a joy to work with, and we don't
have any partisan differences here. Wish the rest of the
Congress could get along as well as we do.
Normally, we do not have additional opening statements. But
since there is only one other member of the subcommittee here,
Senator Craig, do you have something you would like to say
before we hear from the Secretary?
Senator Craig. Well, Mr. Chairman, thank you very much.
I guess I was under some odd illusion that this was the Ag
Committee, and at this hour, you were probably going to serve
breakfast.
But that doesn't appear to be the case.
Senator Bennett. That is an illusion, sir.
Senator Craig. All right. All right. Well, it is possible
that the Secretary could have brought examples of products of a
variety of States.
Anyway, let me echo what both our Chairman and our Ranking
Member have said about the performance of the Department over
the last year and during, Mr. Secretary, some of these most
difficult times. I am always amazed that one agency that was
not designed to do what the press expected it to do, be a first
responder, largely got criticism while so many others did so
very well.
The Chairman and the Ranking Member have expressed how USDA
performed in Katrina. I chair the authorizing committee of
Veterans Affairs, another unbelievable example of true heroism.
Thousands of people rescued. No one lost their lives. We
evacuated 3 hospitals and the pharmaceuticals and the families
of the employees and the pets.
And yet that has made no headlines as, once again, another
agency of our Federal Government in a time of tremendous
difficulty responded very gallantly, with its staff refusing to
leave the hospitals in care of their patients. Concerned about
their families, obviously, but not leaving.
So there are great stories out there, and it is important
that we recognize them because somehow they don't rise to the
level of attention on the part of others.
We are on the eve of a 2007 Farm Bill. It is looming large
on the horizon, Mr. Secretary, at a time when the Chairman has
already expressed the cuts that are proposed in this budget.
And I think he was modest in saying a hole in which one will
attempt to dig ourselves out. It is a hole, and we will see how
we can handle it.
At the same time, I think you and I were expressing the
oddity this morning of a record snow storm in western Oregon
and range fires in Kansas, all on the same morning, reported on
the same news clip. Record drought in northern Texas and
Oklahoma and Arizona and parts of Kansas, and it doesn't appear
to be alleviating at this moment. There will probably be some
extraordinary needs there that my guess is not in this budget.
So with that, let us get to your testimony and the
beginning of a very positive working relationship on this
budget to resolve our differences and serve American
agriculture.
Thank you. Thank you, Mr. Chairman.
prepared statements
The subcommittee has received statements from Senators
Cochran and Durbin which will be placed in the record.
[The statements follow:]
Prepared Statement of Senator Thad Cochran
Mr. Chairman, thank you for holding this hearing on the fiscal year
2007 United States Department of Agriculture budget. I welcome
Secretary Johanns back to the Committee.
I want to thank Secretary Johanns and his staff for their work
throughout the Gulf Coast region for their assistance in the effort to
recover from the devastating impact of Hurricanes Katrina and Rita. The
Department has a large presence in the hurricane affected region which
is an important asset to the communities of the Gulf Coast.
The employees of the National Forest Service, Natural Resource
Conservation Service, Rural Development, and Farm Service Agency were
all ready to assist immediately following the hurricanes. These
agencies are to be commended for their swift action and ability to not
let ``red tape'' get in the way of providing immediate help to
thousands of Mississippi residents devastated by Hurricanes Katrina and
Rita. The efficient manner in which USDA was able to respond after the
Hurricane Katrina should be an example for all agencies during times of
crisis.
All of Mississippi's agriculture industries were hurt by the
hurricanes last summer. Producers and the residents of the rural areas
of Mississippi appreciate the continued support USDA has provided for
hurricane related losses. But, much more help is needed to get the
disaster victims back on their feet. I look forward to continuing to
work with USDA to further assist these family farms and ranches.
An important aspect of the Agriculture Appropriations bill is the
funding it provides for agriculture research. This research is a
critical part of ensuring that U.S. producers remain the leaders in
food and fiber production. The funding this bill invests in agriculture
research is a small sum compared to the economic benefit it has on a
farmer's bottom line. I thank Chairman Bennett and the Ranking Member
Senator Kohl for their continued leadership to assist America's farmers
and ranchers.
Mr. Chairman, I thank you for holding this hearing and I look
forward to the testimony.
______
Prepared Statement of Senator Richard J. Durbin
Mr. Chairman, I thank you for holding this hearing on the
President's fiscal year 2007 Budget. I thank Secretary Johanns for
giving his testimony and agreeing to be here.
I see two main problems with the administration's budget proposal
for programs within the jurisdiction of the U.S. Department of
Agriculture (USDA). First, the budget does not give farmers the
certainty they need from the Federal Government. Farmers and ranchers
are engaged in a risky industry, and they do their best to mitigate
these risks. Irregular weather systems, crop and livestock diseases
that can travel across a continent in a matter of months, and crop and
energy prices are among the variables that are out of the hands of
individual producers. Farmers understand these risks and build them
into their plans by purchasing crop insurance, planting more than one
variety of a crop, and keeping up with advances in technology that make
them more profitable. However, there's one source of uncertainty that
should not tamper with the viability of farming: the Federal
Government's spending priorities.
We passed a Farm Bill in 2002 that made a commitment to farmers
through 2007 when the bill expires. Now we all understand the need to
reduce the deficit. However, farmers and the programs within the
jurisdiction of the USDA are bearing the brunt of budget savings plans.
Last year, mandatory programs within the mandate of the USDA took a
$2.7 billion hit over 5 years. This cut amounted to 7 percent of the
budget reconciliation savings, even though spending on USDA programs
accounted for far less of a share of the Federal Government's budget.
In addition, it's important to note that the Farm Bill has been far
less expensive than its original price tag.
On top of these cuts, the administration is now asking for a 5
percent across-the-board cut in direct payments, counter-cyclical
payments, and marketing loans. By my estimations, a 5 percent cut will
mean that producers in the State of Illinois stand to take a hit of $65
million. This cut would follow a crop year in which Illinois suffered
from one of the worst droughts in the 100 years since modern records
have been kept. With all the uncertainty surrounding the expiration of
the Farm Bill in 2007, I can't understand why the administration is
focusing so much of its budget-savings plans on agricultural producers
that already have to be thinking constantly of their risks.
Second, I believe that this budget demonstrates the
administration's failure to support rural America. One of the most
promising developments for rural America in recent years is the
momentum behind biofuels and alternative energy sources. With soaring
gasoline and diesel prices and an increasing acceptance of the fact
that dependence on Middle Eastern oil is not a good thing, it has
become clear to us all that we must develop alternative fuel sources.
More E-85 pumps and more plants processing biofuels mean more jobs and
development for rural areas. However, at this historic time, I'm afraid
to say that the administration's budget actually cuts funding for the
Clean Cities Program, a program that partners with local governments to
encourage the use of clean non-petroleum fuels and alternative fuel
vehicles. This type of program provides incentives to local communities
to expand biofuel infrastructure, and, in doing so, increases demand
for the production and processing of alternative energy sources.
I thank the Chairman again for holding this hearing and hope that
this subcommittee will consider giving farmers greater certainty and
committing to true rural development in this year's appropriations
bill.
Senator Bennett. Mr. Secretary, we will be pleased to hear
your statement.
STATEMENT OF SECRETARY MIKE JOHANNS
Secretary Johanns. Well, thank you very much, Mr. Chairman,
and I do appreciate the opportunity to be here in front of this
subcommittee.
I also appreciate the compliments relative to the Katrina
response. I want to assure each of you that those compliments
will be passed on to our employees, who were the ones who were
truly at the front lines. And we always accept the criticism of
missteps and see that as a challenge to get better.
It has been a year since I became Secretary, and it has
been quite a year. We have expanded farm exports. We have
worked on new trade agreements. We have reopened beef markets,
and we have witnessed strength throughout the farm economy.
During 2005, we have also confronted some very serious
issues--hurricanes, natural disasters, AI pandemic, and rising
energy costs. USDA has played a significant role in responding
to these challenges.
President Bush and I are very proud of the efforts of our
employees relative to the hurricanes in the Gulf Coast region.
They provided food and shelter, protection, emergency
assistance rapidly, and did so very professionally. And those
are just a few of the ways that we assisted in that region.
There does remain a great deal yet to be done to normalize
their lives. People are struggling to get their homes back,
their farms and ranches, and their communities. That is why I
am pleased to announce that on January 26, 2006, based upon
congressional action and the use of existing authorities, USDA
made available $2.8 billion to assist those impacted by
hurricanes. This additional funding brings our effort at USDA
to $4.5 billion.
On February 16, the President submitted a supplemental that
includes $55 million for the USDA to recover additional costs
of operating the National Finance Center, which is there in New
Orleans, restore the ARS research lab in New Orleans, and to
fund floodplain easements. A second supplemental submitted the
same date includes $350 million for Public Law 480, Title II,
international food assistance to meet emergency food needs.
The President's 2007 budget for USDA does meet important
priorities while exercising fiscal discipline in order to deal
with the Federal deficit. Reducing the deficit is a critical
part of the President's economic plan. It strengthens the
economy and creates jobs.
Farmers and ranchers know the importance of a healthy
economy. It raises income, and it increases demand for the
products that they raise. Farmers and ranchers also know that
the deficit and resulting burden of debt have a profound impact
on their way of life and the ability of future generations to
participate in agriculture.
Because of the overriding need to reduce the Federal
deficit, USDA is sharing in the governmentwide effort. There
are proposals in the budget that will produce real savings in
both mandatory and discretionary spending. The President's 2007
budget, which was released about a month ago, indicates that
USDA expenditures are expected to decrease about $3 billion.
The decrease in 2007 is due to CCC reductions from program
changes, the legislative proposals, and because one-time
supplemental funding is not continued. The discretionary
appropriation request pending before this subcommittee which
does not include Forest Service, as you know--is for $15.6
billion.
Some of the highlights, if I could just quickly run through
those. Avian influenza. We have been closely monitoring the
alarming spread of highly pathogenic AI around the world. I do
want to assure you that USDA is a full partner in dealing with
this potential pandemic.
In response to the President's request, Congress provided
over $91 million in 2006 emergency supplemental funding for
USDA, and we thank you for that. That money will be used for
our AI efforts. We are using those funds for international
efforts, domestic surveillance of poultry and migratory birds,
diagnostics, emergency preparedness and response, and research.
The 2007 budget includes $82 million for avian influenza.
Setting aside that one-time emergency supplemental, the $82
million represents an increase of $66 million over 2006 funding
levels.
The budget proposes $322 million in USDA funding for the
multi-agency Food and Agriculture Defense Initiative, which is
funded now at nearly $540 million governmentwide. The USDA
portion represents a $127 million increase over 2006. That
figure does not include last year's one-time funding for the
construction project in Ames, Iowa, for the National Centers
for Animal Health because that project has been funded.
But funding increases do exist. There is $23 million in
increases to strengthen the Food Emergency Response Network and
Regional Diagnostic Network. There's also $42 million in
increases for research to ensure food safety, identify
pathogens, develop improved animal vaccines, and better
understand the genes that provide disease resistance. And then
there's $62 million in increases to enhance surveillance and
monitoring activities. That helps us detect pest and disease
threats to improve response capabilities.
Moving on to another priority, energy. I recently announced
a comprehensive energy strategy. As I talked to farmers all
across the country, they emphasized the high cost of energy,
and so we went to work on that. I am pleased that this budget
continues to provide tools that help producers with energy
costs. It also funds the development of renewable energy
resources and new energy-efficient technology.
In 2007, we will have at least $345 million available for
loans, grants, and other support for energy projects. Within
this total, USDA's core investment in energy-related projects
increases to $85 million from $67 million in 2006. This
includes resources available to support renewable energy
research and demonstration projects, as well as additional
efforts to support energy development.
In addition, we are targeting renewable energy and energy
efficiency projects through our rural development loan and
grant programs. We anticipate investments in excess of about
$250 million each year in fiscal years 2006 and 2007.
Throughout 2007, USDA will continue its many successful
partnerships with the Energy Department, Department of the
Interior, and the EPA. USDA's efforts will be coordinated by a
newly created Energy Policy Council.
In a related matter, I am pleased to be before this
subcommittee today to make an announcement. I am pleased to
announce the issuance of the final rule designating the first
six items under the Federal Biobased Products Preferred
Procurement Program. This rule is available for viewing at the
Federal Register today. It will be published tomorrow.
Under the biobased program, all Federal agencies will have
to give the designated items preference in their procurement.
We believe the designation of these six biobased items
initiates a new, economic opportunity for farmers and ranchers.
Increased Federal procurement will lead to greater acceptance
of biobased products, lower prices, and more variety of
products in the market.
The final rule is the first of a series of rules that we
expect to publish in 2006 that will designate biobased items
consisting of hundreds of branded products. If I might just
take a little personal privilege and thank Senator Tom Harkin.
He worked very hard on this. When I sat down with him a year
ago or more to talk about the biobased program, it was at the
top of his list.
We thank everybody who has been a part of this effort. If
you will remember, this came out of the 2002 Farm Bill. So
there has been a lot of effort to finalize the rule. We thank
Congress for pushing this forward. I think it is really a good
item.
In terms of farm programs, last year, as we released the
budget, there was an expectation by some that the Farm Bill
expenditures would end up below 2002 projections. That is what
we heard last year. This is not the case.
In 2007, even with the proposed reductions, we expect to
spend nearly $7 billion more than was projected in the 2002
Farm Bill. And the Reconciliation Act passed weeks ago delays,
but it does not reduce farm commodity programs. The one
exception is the Step 2 program, which is the cotton program.
We acknowledge that there are real reductions in
Reconciliation, but they affect other programs, such as rural
development, research, conservation. Thus, the administration
is reproposing changes to reduce farm program spending. They
include reducing commodity payments by 5 percent; reducing the
payment limit, implementing small marketing assessments on
sugar and milk; and operating the Dairy Price Support Program
at minimum cost.
In order to improve the effectiveness of providing good
service to farmers, USDA also continues to work with Congress
to modernize the field office structure of FSA. Although
improvements have been made in modernizing a portion of the
computer system, such as Web-based computing systems and the
GIS, further investments are needed to replace the remaining
outdated and obsolete legacy systems.
This will also permit the full use of Web-based Common
Computing Environment. This subcommittee has supported and
funded that initiative, and I want you to know how much we
appreciate that.
FSA will also work with farmers and ranchers at the local
level and with Congress to identify how to consolidate offices
where appropriate and ensure that future investments are
prudent and done so in a manner that uses tax dollars wisely.
In reference to crop insurance, net expenditures for crop
insurance are expected to grow since the reform of 2000 by
about 50 percent between 2001 to 2007. At the same time,
producers have continued to receive disaster payments, as you
know, in ad hoc disaster programs. From 2001 to 2007, when crop
insurance payouts did start to rise dramatically, we also
delivered about $9 billion to producers in ad hoc actions.
The budget again includes proposals to enhance crop
insurance and reduce costs to deliver the program in order to
reduce dependence on ad hoc disaster programs. The budget also
requests such sums as necessary for mandatory costs associated
with the program and includes funding for additional staffing
that would focus on reducing fraud, waste, and any abuse that
may exist in this program.
In reference to trade, expanding access to global markets
is important for agriculture. Trade plays a critical role. Our
budget proposals for 2007 support our continued commitment to
trade expansion. Increased funding is provided for the Foreign
Agricultural Service to maintain its overseas office presence
and continue its representation on behalf of American
agriculture.
The new FAS Trade Capacity Building initiative is funded
for technical assistance and training activities to assist
developing countries. The goal is to strengthen their
agricultural policy-making and regulatory systems so they can
become better trading partners in other parts of the world.
For the foreign food assistance programs, the budget places
increased emphasis on meeting the highest priority emergency
and economic development needs, including maintaining funding
for the McGovern-Dole International Food for Education and
Child Nutrition Program.
Regarding food safety, in order to continue the protection
of the Nation's supply of meat, poultry, and egg products, the
budget requests funds needed to maintain Federal support of
inspection systems. The budget also requests funding to expand
the Food Emergency Response Network to support the Food and
Agriculture Defense Initiative. With this funding, FSIS will
increase the capability of State and local laboratories to
handle large volumes of testing.
The budget proposes over $4 billion in mandatory funding to
continue implementation of conservation programs arising out of
the 2002 Farm Bill. Within the conservation total, $83 million
in additional resources are requested to extend the
Conservation Security Program into additional watersheds and to
service prior year contracts. I would like to mention that the
2006 CSP sign-ups began on February 13. They will continue
through the end of March.
To help meet the President's commitment to create, improve,
and protect at least 3 million wetland acres over a 5-year
period, beginning in 2004, the budget includes over $400
million for Wetlands Reserve Program. This will allow for an
additional 250,000 acres to be enrolled in the program in 2007.
That is 100,000 more acres than estimated for 2006 and the
largest 1-year enrollment since the program started in 1992.
In the aggregate, funding in the budget will support
enrollment of an additional 23 million acres in conservation
programs, largely in EQIP. This brings total enrollment to
about 197 million acres. That is the highest enrollment in
conservation programs in our Nation's history. The budget also
includes discretionary funding for ongoing conservation work to
meet high-priority natural resources concerns.
For rural development, that part of the budget includes
$14.4 billion in direct loans, loan guarantees, and grants to
improve economic opportunities in rural areas. This assistance
could be used for everything from financing rural businesses,
electric and telecommunications facilities, water and waste
disposal projects, and other community facilities. It will also
provide home ownership opportunities and assist in revitalizing
our multi-family housing projects.
The 2007 budget maintains the administration's commitment
to revitalize multi-family housing and provides rent protection
for tenants of projects that are withdrawn from the program.
Senator, you mentioned research. In the research area, the
2007 budget funds the highest-priority research facing American
agriculture. It also increases the use of competition to
improve the quality of research.
The budget includes a $66 million increase for the National
Research Initiative. The budget also includes $107 million in
increases for high-priority research conducted by ARS
scientists in areas such as food and agriculture defense,
bioenergy, plant and animal genomics and genetics, and human
nutrition and obesity prevention.
Speaking of nutrition, we fully fund the expected
requirements of the 3 major nutrition assistance programs--WIC,
Food Stamps, and Child Nutrition. For WIC, which is the
Department's largest discretionary program, the budget proposes
$5.4 billion in program level to support the estimated level of
WIC participation. Included in the budget is a $125 million
contingency fund.
For the Food Stamp Program, the budget includes resources
to totally fund estimated participation and also provides a $3
billion contingency fund should costs exceed what we are
estimating. We expect an increased level of school lunch
participation of about 2 percent, so the budget includes a $700
million increase for that. There is also a new proposal for a
$300 million contingency fund for the Child Nutrition Programs.
PREPARED STATEMENTS
I just want to wrap up and say we are deeply committed to
working on this deficit. We recognize that that is your
challenge also. We look forward to working with this
Subcommittee in that endeavor.
Mr. Chairman, thank you.
[The statements follow:]
Prepared Statement of Mike Johanns
Mr. Chairman and distinguished members of this Committee, I am
pleased to appear before you to discuss the fiscal year 2007 budget for
the Department of Agriculture (USDA).
I am joined today by Deputy Secretary Chuck Conner; Scott Steele,
our Budget Officer; and Keith Collins, our Chief Economist.
It has been a year since I was given the honor to serve our country
as Secretary of Agriculture. It has been an eventful and challenging
year. We have expanded farm export opportunities through new trade
agreements; re-opened beef export markets that were closed after
finding Bovine Spongiform Encephalopathy (BSE); responded immediately
to severe natural disasters; and witnessed continued strength in the
farm economy.
A major priority has been working to achieve growth in the farm
economy through trade. We continue to open foreign markets to U.S.
agricultural exports. Since 2001, the administration completed free
trade agreements with 15 countries, including the recently completed
agreements with Peru, Colombia, and Oman and the Central America-
Dominican Republic Free Trade Agreement (CAFTA-DR). The agriculture
industry estimates that CAFTA-DR could boost our farm exports by $1.5
billion. Negotiations for free trade agreements with a host of other
important markets are continuing, and we look forward to initiating
free trade negotiations with Korea, our sixth largest agricultural
export market, in the near future.
During the past year, we also have increased our efforts to reform
agricultural trading practices. The United States presented an
ambitious proposal to advance the World Trade Organization (WTO)
agriculture negotiations and unleash the full potential of the Doha
Development Agenda. Reforming global agriculture trade will create new
jobs and promote economic development. Our goal is to open new markets
by reducing or eliminating unfair competition from production and trade
distorting agricultural subsidies and import barriers. We are now
working very hard to reach agreement on the terms of an agricultural
agreement by the end of April, as agreed to by WTO Members at the
recent Hong Kong Ministerial.
Another priority has been our efforts to re-open overseas markets
for U.S. beef and beef products. We have achieved a great deal of
progress. We have regained at least partial access to 28 markets. As
you know, recently a shipment to Japan did not comply with the terms of
our export agreement. We are working aggressively to secure a
resumption of trade in the near future.
During 2005, we also had to confront other serious issues, such as
hurricanes and other natural disasters, the threat of an avian
influenza pandemic, and rising energy costs. USDA has played a
significant role in responding to these challenges and has made a
tangible and positive difference in American lives.
President Bush and I are very proud of the efforts USDA employees
have made to provide assistance throughout the Gulf Coast Region in the
immediate aftermath of recent hurricanes. These employees helped to
rescue more than 600 survivors in Louisiana. We made available more
than 22 million pounds of food and 2 million pounds of baby formula for
use by the Red Cross, Salvation Army, and other organizations. USDA
assisted over 10,000 evacuees obtain temporary housing in 45 States.
USDA also aided in the transport of over 13,000 evacuees and our
employees fanned out across the region to clear debris from farms,
ranches and other watersheds. During the initial days and weeks
following the storm, USDA worked closely with the Federal Emergency
Management Agency to set up and support 80 disaster recovery centers in
Louisiana and Mississippi. The Forest Service played a critical role by
utilizing its incident management abilities, managing evacuation
centers and base camps, providing logistical support, clearing
roadways, helping with search and rescue operations, and operating
mobilization centers and trailer staging areas.
These are just a few of the ways that USDA was able to provide
immediate assistance to that region. But there still remains a great
deal to be done to normalize life for those struggling to take back
their homes, their farms or ranches, and their communities. That is why
I was pleased to announce on January 26, 2006, that based on
Congressional action and the use of existing authorities, USDA has made
available $2.8 billion to assist those impacted by the hurricanes. Of
this amount, $1.2 billion will be made available to agricultural
producers through various programs. In addition, $1.6 billion will be
used to restore homes and rural communities. This additional funding
brings total USDA aid to hurricane disaster victims to more than $4.5
billion since September 2005. Finally, the supplemental request
submitted on February 16 includes $55 million in funding to cover
additional costs of operating the National Finance Center, repair
damages to the Agricultural Research Service (ARS) laboratory in New
Orleans and fund floodplain easements.
2007 BUDGET
The President's 2007 budget for USDA meets our most important
priorities, while exercising the kind of fiscal discipline that is
absolutely necessary to reduce the Federal deficit. Reducing the
deficit is a critical part of the President's economic plan. It will
strengthen the economy and create more jobs. Farmers, ranchers, and
rural citizens know the importance of a healthy economy, which raises
household incomes and increases demand for their products.
Farmers, ranchers, and rural citizens also know that the deficit
and resulting burden of debt have a profound impact on the economy and,
thus, on their way of life and the ability of future generations to
participate in agriculture. In the past few months, I had the
opportunity to participate in over 20 Farm Bill forums. It provided me
the opportunity to meet many producers and hear their ideas on farm
policies and the economy. One aspect of the Farm Bill forums focused on
the development of farm policy that supports future generations of
farmers and ranchers. During these forums, I discussed with producers
and community leaders how deficits increase the national debt and debt
service costs and displace private consumption and investment, which
can be roadblocks to future generations trying to enter agriculture.
Producers across the country applauded us for that focus and encouraged
us to take down roadblocks that stand in the way of young people. We
cannot--on one hand--close our eyes to the deficit--while on the other
hand claim to be supporting future generations of producers.
USDA recognizes the overriding need to reduce the Federal deficit,
and shares the responsibility of controlling Federal spending. There
are proposals in the budget for USDA that will produce real savings in
both mandatory and discretionary spending. With that said, the
President's 2007 budget request for USDA does meet the Nation's
priorities by growing the farm economy through trade; protecting
America's food and agriculture; supporting sound land management
practices and conservation; providing nutrition assistance to the needy
at home and abroad; and creating economic opportunity in rural America.
It also makes Government more effective by improving management and
accountability and by eliminating, reforming, or phasing out programs
that are not cost-effective or do not show measurable results.
The President's 2007 budget, which was released on February 6,
indicates that USDA expenditures are estimated to decrease from about
$96 billion in 2006 to nearly $93 billion in 2007. For the Department's
discretionary budget, the overall budget authority request is $19.7
billion. This compares to $21.9 billion provided in 2006. There are two
main reasons for these reductions. One is that we assume we will not
need the emergency disaster assistance funding and other emergency
supplemental funding that was needed in 2006. The second reason is
proposed program reductions, which include some legislative changes.
The discretionary appropriation request pending before this Committee,
which does not include the Forest Service, is $15.6 billion.
I would now like to focus on some specific program highlights.
PATHOGENIC AVIAN INFLUENZA (AI)
For more than two decades, USDA has worked to prepare for and
prevent an outbreak of dangerous strains of AI in our country. The
greatest concern is the potential for highly pathogenic AI to develop
into a human pandemic. We appreciate the $91.4 million in emergency
supplemental funding provided in December 2005. Those funds are being
used for specific one-time activities aimed at controlling the disease
abroad and keeping it away from U.S. borders; enhancing surveillance of
wildlife and domestic poultry; improving diagnostics; and enhancing
preparedness.
The 2006 Appropriations Act made $16 million available for on-going
programs to deal with low pathogenic AI and other AI research. Low
pathogenic AI is of concern for its potential costs to the poultry
industry and potential ability to mutate into highly pathogenic AI. The
2007 budget requests a total of $82 million for AI, an increase of $66
million over the amount appropriated in 2006. Of this amount, $57
million is related to highly pathogenic activities, including:
surveillance and diagnostics work; preparedness and response efforts;
and international veterinary capacity building. An additional increase
of more than $6 million is requested for the development of methods to
detect AI in the environment and further AI research, including
development of poultry vaccines. An increase of $3 million is requested
to expand activities related to the program for on-going low pathogenic
AI.
FOOD AND AGRICULTURE DEFENSE INITIATIVE
In order to protect American agriculture and the food supply from
intentional terrorist threats and unintentional introductions, the
budget proposes $322 million for USDA's part of the President's Food
and Agriculture Defense Initiative, which is 60 percent of total
governmentwide funding for the initiative. Funding for ongoing programs
includes a $127 million increase, or 65 percent above 2006. This does
not include funding for construction of the Ames, Iowa facility for
animal research and diagnostics, which was fully funded in 2006. Of the
total amount, an increase of about $30 million for Food Defense would
enhance the Food Safety and Inspection Service's (FSIS) ability to
detect and respond to food emergencies and for USDA research agencies
to conduct related research. For Agriculture Defense, the budget
includes an increase of about $97 million to improve the Animal and
Plant Health Inspection Service's (APHIS) ability to safeguard the
agricultural sector through enhanced monitoring and surveillance of
plant and animal health, including wildlife; improve response
capabilities, including provisions for the National Veterinary
Stockpile; and further research on emerging and exotic diseases.
ENERGY
I have heard from farmers and ranchers as I traveled around the
Nation about the burden of the high cost of energy. We are taking
action to help farmers, ranchers, and rural businesses reduce their
energy consumption and make alternative fuels more available. USDA is
providing technical assistance and incentives for conservation
practices that can result in substantial energy savings. The Natural
Resources Conservation Service has recently provided an online tool
that clearly demonstrates how costs can be reduced by using alternative
tillage practices. In addition, I have directed the Farm Service Agency
(FSA) to maximize the use of our guaranteed and direct farm loan
programs to help eligible producers who face credit challenges due to
increased energy-related operating costs. Because it is likely that
energy prices will continue to remain high and fluctuate in the future,
the Risk Management Agency will also examine risk management tools that
can help farmers limit the negative impact of energy cost increases. To
make sure that USDA is effectively using its resources to address
energy issues confronting U.S. agriculture, I have recently announced a
comprehensive energy strategy to help producers with high energy costs
and to coordinate USDA's energy initiatives.
These investments include: research and development, farmer and
rancher education programs and using public lands to facilitate the
generation and transmission of energy. We are seeking increases in
research and development (R&D) and farmer and rancher education
programs. We are also targeting renewable energy investments in Rural
Development programs where we anticipate making loans and grants of
$250 million or more depending on specific proposals received. USDA is
continuing its successful biomass research and development partnership
with the Department of Energy in 2007. Past projects funded through
this collaborative effort have focused on improving the conversion of
switchgrass and other cellulosic materials to ethanol as a replacement
for gasoline. These R&D investments will pay off as the efficiency and
cost effectiveness of using switchgrass increases.
FARM COMMODITY PROGRAM SPENDING
As part of the President's program to exercise fiscal discipline
and reduce the deficit, the budget proposes, once again, that the farm
commodity programs funded through the Commodity Credit Corporation
(CCC) contribute to the governmentwide deficit reduction effort.
Despite record levels of net cash farm income and record agricultural
exports, commodity subsidies are significant and near record highs.
Payments are at the highest since the enactment of the 2002 Farm Bill.
Compared to the original 2002 Farm Bill estimate, lower than expected
expenditures from 2003 to 2004 are estimated to be offset by much
higher net outlays during 2005 through 2007. Government farm support
from 2005 to 2007 is at historically high levels. This recent trend
reflects higher than expected program costs that are raising the
deficit.
Since the recent Reconciliation Act achieved only very limited
savings in CCC programs, the 2007 budget proposes legislative changes
similar to the ones included in the 2006 budget. The proposals, which
are spread across commodity sectors, include: reducing farm program
payments across the board by 5 percent; reducing the payment limitation
to $250,000; operating the dairy price support program at the least
cost; and applying small marketing assessments to sugar and dairy.
Similar to last year, these proposals are designed to work within
the existing structure of the 2002 Farm Bill to achieve savings of
about $1 billion in 2007 and about $7.7 billion over 10 years. Even
with the proposed reductions, CCC expenditures in 2007 are projected to
remain $7 billion above the estimates made when the Farm Bill was
enacted.
FARM PROGRAM DELIVERY
Recognizing the importance of our farm programs to the livelihood
and ongoing operations of farmers and ranchers throughout the Nation,
we are continuing to review the farm program delivery system to ensure
we are providing the highest level of customer service. In addition to
the funding needed to support an adequate level of staffing to deliver
program benefits in a timely manner, our budget proposes resources to
make the IT investments that are critical to modernizing the delivery
of these programs. I appreciate the Committee's support for efforts
that have been made in recent years to design and implement a common
computing environment (CCE) that allows the service center agencies to
communicate via the internet and take advantage of shared services.
However, critical needs remain in updating the so-called legacy farm
program delivery systems that are currently operated with decades-old
software and hardware that is no longer produced. It is imperative that
these systems be updated so they can also take advantage of the CCE, a
modern web-based system, and make the fullest use of investments being
made to improve geographic information systems and data. The budget
proposes $14 million to continue an effort to enhance the efficiency of
program delivery by redesigning business processes and developing the
IT systems to carry out those processes. I would appreciate the
Committee's favorable consideration of this proposal.
CROP INSURANCE
Crop insurance is designed to be the primary Federal risk
management tool for farmers and ranchers. Crop insurance expenditures
are expected to grow by more than 50 percent between 2001 and 2007 with
the implementation of crop insurance reforms in 2000, the expansion of
the program to new crops, and the development of new types of coverage.
Despite this growth, since 2000, four ad hoc disaster programs have
been authorized, covering 6 crop years. These ad hoc payments add up to
over $9 billion. The continued reliance on disaster assistance stems,
in part, from the low coverage level of catastrophic crop insurance
(CAT), which provides a maximum of 27.5 percent of the crop value for a
total crop loss. When natural disasters occur, that low level of
protection creates the demand for additional disaster assistance.
In continuing the administration's efforts to more effectively
budget and administer crop disaster programs, the 2007 budget
reproposes changes included in the 2006 budget to encourage producers
to purchase more adequate crop insurance coverage by tying the receipt
of direct payments or any other Federal payment for crops to the
purchase of higher levels of crop insurance. This change would ensure
that the farmer's revenue loss would not be greater than 50 percent.
Other changes include making catastrophic coverage more equitable in
its treatment of both large and small farms, restructuring premium
rates to better reflect historical losses, and reducing delivery costs.
The combination of changes is expected to significantly improve the
program and save the Government approximately $140 million per year,
beginning in 2008. In total, this change should ensure that the
majority of producers have crop insurance and that the minimum coverage
level is sufficient to sustain the producer in times of loss.
The 2007 budget includes about $81 million in discretionary funding
to administer the Federal Crop Insurance Program, compared to about $76
million for 2006. In support of our efforts to strengthen oversight and
improve management efficiency, the budget includes funding for the
replacement of a decade old IT system that has reached the end of its
useful life. Funding is also included for additional staffing needed to
reduce fraud, waste and abuse in the crop insurance program.
Additionally, a legislative proposal will be submitted to collect a
participation fee from insurance companies to help share in the cost of
modernizing the existing IT system beginning in fiscal year 2008.
TRADE
As I mentioned, a top priority has been to restore access to the
Japanese and other markets for American beef overseas. Having achieved
positive results, we are disappointed that the Japanese market has
temporarily closed again. The failure to meet all of the requirements
of our export agreement with Japan is unacceptable. We are taking this
matter seriously, recognizing the importance of our beef export market,
and we have taken swift and firm action to address the situation.
Last January after this incident occurred, I announced a series of
follow-up actions we are taking to address this situation and outlined
those actions in discussions with Japanese officials, including the
Minister of Agriculture, Forestry, and Fisheries. Since then, the
Department has conducted two detailed investigations of the incident,
and we have provided the results to the Japanese Government for their
review.
We look forward to an expedited review of the situation by the
Japanese Government and the resumption of beef trade in the near
future. It is also worth noting that, despite the problems we have
encountered with Japan, we are making progress in reopening other
markets. Hong Kong, Taiwan, and Singapore have reopened their markets
while Korea formally announced its plans to resume imports by March.
Expanding access to global markets is important for all U.S. food
and agricultural products, and plays a critical role in our efforts to
ensure a prosperous future for America's farmers and ranchers. Our
budget proposals for 2007 support our continued commitment to trade
expansion activities. Increased funding is provided for the Foreign
Agricultural Service (FAS) to maintain its overseas office presence and
continue its representation and advocacy activities on behalf of
American agriculture.
A new FAS Trade Capacity Building initiative is funded for
technical assistance and training activities that will assist
developing countries to strengthen their agricultural policy-making and
regulatory systems and become better trading partners. By assisting
these countries to adopt policies that meet World Trade Organization
standards and adopt regulatory systems that are transparent and
science-based, we will improve access for U.S. products to their
markets. Also, by enhancing their ability to benefit from trade, we
encourage them to become more forthcoming and supportive in market
access negotiations. These activities would complement the steps APHIS
will take to open offices in strategic foreign locations to address
technical sanitary and phytosanitary issues that can impede trade
between the United States and other countries.
For the foreign food assistance programs, the budget places
increased emphasis on meeting the highest priority emergency and
economic development needs. Funding for the McGovern-Dole International
Food for Education and Child Nutrition Program is maintained at this
year's level, with a modest increase in participation expected. The
program is helping children in countries with severe needs in education
and nutrition, such as Afghanistan. Over a 5-year period, USDA is
providing over $50 million of assistance through the McGovern-Dole
Program to Afghanistan where it is helping to build schools, improve
attendance, and feed about 60,000 students each year.
Food for Progress programming carried out with CCC funding is
projected to increase slightly in 2007. The program provides assistance
to developing countries and emerging democracies that have made
commitments and are taking steps to introduce and expand free
enterprise in their agricultural economies.
To address emergency needs this year, the supplemental
appropriations request submitted by the President on February 16
includes an additional $350 million for Public Law 480 title II food
aid donations, which is needed to bolster our response to urgent food
needs in several regions of Africa. With this funding, the United
States will be able to meet our target of providing 50 percent of the
identified food needs in Darfur and other regions of Sudan. It will
also help us to respond to what appears to be a burgeoning food crisis
in East and Central Africa, which has been brought on by disappointing
rains and other problems.
The budget further enhances our ability to respond to emergency
situations overseas in which food aid is critical to preventing famine
and saving lives. In light of a heightened demand for emergency food
aid in recent years, all funding for Public Law 480 food assistance in
2007 is requested for the Title II donations program which is increased
by $80 million. To help improve the timeliness, efficiency, and
effectiveness of the U.S. Government's response to emergency
situations, increased flexibility is requested in the purchasing of
Title II commodities. The budget proposes that the Administrator of the
Agency for International Development (AID) have the authority to use up
to 25 percent of Title II funding to purchase commodities in locations
closer to where they are needed, such as neighboring countries.
FOOD SAFETY
The Nation's current food safety inspection system has demonstrated
that our food supply is among the safest in the world. Recent data
released by the Centers for Disease Control and Prevention continues to
show improvements based on historical reductions in the incidence of
foodborne illness. The continued reduction in illnesses from pathogens
like E. coli O157:H7 is a tremendous success story and USDA is
committed to continuing this positive trend in the future. These
results demonstrate that we are moving in the right direction. We have
increased the focus of our policies on the goal to reduce human
foodborne illness by measuring the prevalence and types of food safety
failures and using this knowledge to focus resources and attention
where the risks are the greatest. Through these actions, we are
protecting the public's health through a safer food supply.
The 2007 budget provides for continued protection of the Nation's
supply of meat, poultry and egg products and includes a program level
of $987 million for FSIS. This is an increase of $35 million over 2006.
Approximately half of the increase in funds is for pay, including
monies required to maintain Federal support of State inspection
programs to meet the demand for inspection services. The remaining
amount is for program changes, including funding to allow FSIS to move
towards a more robust risk-based inspection system.
In order to take further steps towards a more enhanced risk-based
inspection system, funds are requested to develop risk-based
verification and enforcement strategies that take into account the
hazards posed by products and how well establishments are controlling
those hazards. This would include additional microbiological sampling,
inspector training, and the creation of an establishment database.
Information from these initiatives will enable FSIS to wisely allocate
resources to priority areas and provide increased understanding of
which food safety systems prevent foodborne illness and promote the
public's health. In addition, funding is requested to increase the
speed at which the agency collects, analyzes, and reports Salmonella
testing data, which will improve the agency's response to outbreaks of
foodborne illness.
The budget also requests funding to expand the Food Emergency
Response Network (FERN) in support of the Food and Agriculture Defense
Initiative. With this funding FSIS will continue to develop the network
of food laboratories and the result will be an increase in the
capability of a network of coordinated Federal, State and local
laboratories to handle large volumes of testing that would be needed
for biosurveillance or in the event of a widespread food emergency.
For FSIS, the budget requests an appropriation of $863 million and
$124 million in existing fees. In addition, the budget includes $105
million that would be derived from new user fees to recover the cost of
providing inspection services beyond an approved 8-hour-primary shift.
CONSERVATION
The 2002 Farm Bill represented an unprecedented commitment to
conservation. The 2007 budget continues to support this commitment with
a record level $4 billion request in mandatory funding to expand
enrollment in these programs by an additional 23 million acres. Under
the proposal, USDA would provide conservation assistance on 197 million
acres, the greatest amount of conservation assistance in history.
Within the total amount, the budget proposes over $400 million for
the Wetlands Reserve Program (WRP), an increase of $153 million, or 61
percent over 2006. The projected WRP enrollment for 2007 would be the
largest ever, involving 250,000 acres, and will bring the total acreage
enrolled in the program to over 2.2 million acres. The WRP is the
principal supporter of the President's goal to restore, protect, and
enhance 3 million acres of wetlands over 5 years beginning in 2004.
Funding for the Conservation Security Program would be increased by
$83 million, or 32 percent, to continue to extend the program to
additional watersheds in 2007. Finally, the 2007 budget supports a net
increase in enrollment of 2.7 million acres in the Conservation Reserve
Program (CRP), which would bring total program enrollment to 38.9
million acres by the end of 2007, a 7 percent increase in coverage. CRP
funding represents more than one-half of the total for all Farm Bill
conservation programs.
The 2007 budget also includes $788 million in discretionary funding
for on-going conservation work. This is a decrease of $207 million
below the 2006 enacted level and reflects the realignment of the
administration's priorities to direct limited conservation funding to
the highest priority natural resource concerns. USDA will be able to
deliver high quality and timely technical assistance to farmers and
ranchers to address natural resource concerns on their operations. The
budget does not request funding for watershed operations and planning,
Grazing Lands Conservation Initiative, and earmarked projects. The
budget also proposes to reduce the number of Federal coordinator
positions funded under the Resource Conservation and Development (RC&D)
program, for a savings of $25 million. Under this proposal, the number
of authorized RC&D areas would be maintained at the current level of
375 but coordinators will be responsible for providing assistance to
multiple areas.
RURAL DEVELOPMENT
The 2007 budget includes $14.4 billion in direct loans, loan
guarantees and grants to improve the economic opportunities and quality
of life in rural America. This assistance will be used to finance rural
businesses, electric and telecommunications facilities, water and waste
disposal projects and other community facilities; provide homeownership
opportunities; and revitalize USDA's portfolio of multi-family housing
projects. Most of the on-going rural development programs are
maintained at current levels. There is a $3.6 billion reduction in
2007, which is due primarily to the exclusion of $1.6 billion in 2006
supplemental emergency funding for the Gulf Coast hurricanes and $1.5
billion for a 2002 Farm Bill program to guarantee notes of private
sector electric and telephone borrowers.
The on-going electric and telecommunications programs are funded at
the anticipated level of demand, over $4.9 billion in direct loans.
About $200 million of this amount is expected to be used for new power
supply projects for renewable energy that will support the President's
energy policy.
The community facilities program provides direct loans, guarantees,
and grants to finance essential community facilities, with priority
given to health and safety facilities. The 2007 budget provides $297
million in direct loans, $208 million in guarantees, and $17 million in
grants for this program--the same as was available for 2006. This level
of funding will support over 560 new or improved health care
facilities, child care, fire and emergency services and other
facilities lacking in rural America.
The proposed budget for the water and waste disposal programs would
support almost $1.1 billion in direct loans. The program would be
supported through loan subsidies and grants at about the same level in
2006--$514 million for 2007 compared to $525 million for 2006. However,
a greater portion of the subsidy would be applied to reducing interest
rates charged to borrowers rather than providing grants. For most
communities, which normally receive a combination of loan and grant
assistance, the reduction in interest rates would be of greater benefit
in terms of lowering the overall debt servicing costs of their
projects, than they would otherwise receive from an equivalent amount
of grant.
The 2007 budget would support $4.8 billion in direct and guaranteed
loans for single-family housing, about the same level as available for
2006. This level of assistance will provide homeownership opportunities
for nearly 41,000 rural families.
The business and industry program is maintained at a level of about
$1 billion in loan guarantees. The value-added program is also
maintained at its current level of $19 million in grants. Overall, the
rural development business programs are expected to create or save over
56,000 rural jobs.
The 2007 budget reproposes the administration's initiative to
revitalize its portfolio of multi-family housing projects, which are
home to close to half a million low-income families. A recent Supreme
Court decision allows project sponsors to prepay their loans and
convert their projects to uses other than low-income housing, putting
tenants at risk of higher rents and potential loss of housing. A
priority under the administration's initiative will be on providing
housing vouchers to protect the rents of tenants of projects that are
withdrawn from the portfolio. The administration will also pursue
enactment of legislation it has already submitted to Congress to
authorize debt restructuring and other incentives for project sponsors
to remain in the program and make necessary repairs.
RESEARCH
The 2007 budget funds the highest priority research issues facing
American agriculture and increases the use of competition to improve
the quality of research. The budget includes a $66 million increase for
the National Research Initiative, the Nation's premier competitive,
peer-reviewed research program for fundamental and applied sciences in
agriculture. The increase includes funding for high priority
initiatives in food and agricultural security, gene mapping, the
ecology and economics of biological invasions, plant biotechnology and
water security. The budget also includes $107 million in increases for
high priority research conducted by ARS scientists in areas such as
food and agricultural defense, bioenergy, plant and animal genomics and
genetics, and human nutrition and obesity prevention. These lines of
investigation have great potential to benefit producers and consumers;
assure an abundant, safe, and inexpensive supply of food; and ensure
the preservation of our natural resource base.
While the 2007 budget continues overall funding for both the Hatch
and McIntire-Stennis programs at the 2006 appropriated level, the
budget proposes an increase in the use of competition to improve the
quality of USDA supported research. The 2007 budget includes a proposal
to modify the Hatch and McIntire-Stennis formula programs so that over
half of the funds would be competitively awarded by 2011. Under the
proposal, the Hatch formula program would be modified by expanding the
multi-State research component from the current base of 25 percent to
about 55 percent of total Hatch funding. In 2007, 35 percent of Hatch
funds will be awarded competitively to multi-State/multi-institutional
projects. Over the course of the next 4 years, the remaining multi-
State formula funds would be phased into competitive funding through an
additional 5 percent increase each year as existing projects are
completed. Therefore, by 2011, about 55 percent of funding under the
Hatch program will be for competitively awarded multi-State projects
and about 45 percent would be allocated as formula funds.
The 2007 budget also modifies the McIntire-Stennis formula program
by creating a multi-State research program that will comprise 59
percent of program funding. The proposal calls for all McIntire-Stennis
multi-State funds to be distributed through competitively awarded
grants in 2007. These proposals take into account the expressed
concerns of USDA partners in the land grant community, including
smaller institutions, regarding the proposal in the 2006 budget. As a
result, this new approach would sustain the use of Federal funds to
leverage non-Federal resources, maintain program continuity, facilitate
responsiveness to State and local issues, and leverage and sustain
partnerships across institutions and States. Our intention is to craft
the details of the programs in consultations with our land grant and
forestry college partners.
NUTRITION ASSISTANCE
The budget contains sufficient resources to fully fund expected
participation, food cost inflation and contingency funds for the
Department's three major nutrition assistance programs: Food Stamps;
Women, Infants and Children (WIC); and Child Nutrition. Participation
levels fluctuate with economic conditions and the budget keeps pace.
WIC participation is expected to grow slowly in 2007 to a total of 8.2
million participants. Food Stamp participation is expected to decrease
about 4 percent from the 2006 projection to about 25.9 million in 2007
as people affected by the hurricanes in the Gulf States get back on
their feet. School Lunch participation is estimated to grow about 2
percent to keep pace with the growing student population, as it has in
recent years, to a new record level of 30.9 million children per day.
For Food Stamps, legislation will be proposed that would exclude
all qualified retirement savings accounts from eligibility
determinations regardless of how other programs treat them. By 2009,
this would allow about 100,000 additional people to participate who
otherwise would have been ineligible unless they spent down their
retirement savings. This would add an estimated $48 million in costs
for 2007 and about $146 million in 2009 when fully implemented. The
2007 budget also reproposes legislation to restrict participation among
certain households with incomes or resources above normal eligibility
thresholds. Affected households are those that do not receive cash
Temporary Assistance for Needy Families (TANF) benefits, but become
categorically eligible for food stamps because they receive a TANF-
funded service, including one-time information and referral. This
change would reduce costs by an estimated $71 million in 2007, with
additional savings in subsequent years.
The WIC request provides full funding for all those estimated to be
eligible and seeking services. At the same time, the Department will
work with stakeholders to contain costs and continue to improve the
program's performance. WIC legislative proposals include limiting
administrative funding to 25 percent of total program costs, and
limiting categorical eligibility to those with incomes under 250
percent of poverty. Also, the budget proposes legislation to require 20
percent State matching for WIC administrative costs. The proposal would
take effect in 2008, after State legislatures have had time to
appropriate the matching funds. WIC is one of the few Federal programs
that does not require States to provide matching funds for
administrative costs.
The 2007 budget does not request funding for the Commodity
Supplemental Food Program (CSFP), which is not available nationwide and
duplicates two of the Nation's largest Federal nutrition assistance
programs--Food Stamps and WIC. Eligible women, infants and children
participating in CSFP will be encouraged to migrate to the WIC Program.
Eligible elderly CSFP recipients will be encouraged to migrate to the
Food Stamp Program, where most are believed to be eligible. The budget
includes temporary transitional benefits for CSFP participants 60 years
of age or older equaling $20 per month for the lesser of 6 months or
until the recipient starts participating in the Food Stamp Program.
DEPARTMENT MANAGEMENT
The 2007 budget builds upon our progress in improving overall
management of the Department. Increased funding is being sought for
selected key priorities:
--Beginning the acquisition of a modern core financial system to
replace USDA's outdated system, which is no longer supported by
a vendor. The current system relies on software that no longer
meets financial management standards. The adoption of
technology that meets these standards will increase the
efficiency of the system, allow for less costly updates and
strengthen internal controls.
--Completing the expansion of the successful Equal Employment
Opportunity complaints processing system to include complaints
of discrimination levied by participants in the Department's
programs.
--Continuing renovations of USDA facilities in order to ensure that
employees and customers have a safe and modern working
environment.
Over the course of the past year, USDA has continued to achieve
success in implementing the President's Management Agenda (PMA). The
PMA focuses our efforts on those things that are most critical to good
management, including sound financial systems, innovative uses of IT,
and ensuring the effective use of human resources. A major part of this
effort has been the use of Program Assessment Rating Tool (PART) to
inform funding and management decisions. Under PART, USDA has evaluated
70 programs and developed plans to improve their performance. These
improvement plans are available to the public on the recently released
ExpectMore.gov website. The website provides the public with easily
accessible information about Federal programs, their performance, and
actions the administration is taking to improve performance in the
coming year. The website is a new tool to help increase transparency
and accountability in Federal programs.
In summary, I want to emphasize that the President is serious about
reducing the deficit to help maintain strong economic growth. This
budget sets clear priorities for U.S. agriculture, conservation, and
nutrition while responsibly restraining spending. This budget puts us
in the right direction for reducing the deficit and protecting future
generations of American producers by establishing the foundation for a
strong economy.
That concludes my statement. I look forward to working with members
and staff of the Committee and will be glad to answer questions you may
have on our budget proposals.
______
Prepared Statement of Annabelle Romero, Deputy Assistant Secretary for
Civil Rights, Office of Assistant Secretary for Civil Rights
Mr. Chairman and members of the Subcommittee, thank you for the
opportunity to submit this statement supporting the President's fiscal
year 2007 budget proposal for the United States Department of
Agriculture's (USDA) Office of the Assistant Secretary for Civil Rights
(ASCR).
The Office of the ASCR provides policy guidance, leadership,
outreach, coordination, training, and complaint prevention and
processing for USDA. Our mission is to provide equal opportunity, equal
access and fair treatment for all USDA customers and employees.
The Office of Civil Rights has made significant progress in
addressing major civil rights challenges at USDA since the
establishment of the ASCR position. The Office of Civil Rights began
fiscal year 2005 with 1,331 pending EEO complaints and ended fiscal
year 2005 with 1,402 EEO complaints. During fiscal year 2005, 662 new
EEO complaints were received, and a total of 591 EEO complaints were
closed. The Office started the fiscal year 2005 year with 363 pending
program complaints and ended fiscal year 2005 with 404 program
complaints.
FISCAL YEAR 2007 OBJECTIVES
The Office of Civil Rights has the following four overarching
strategic objectives for fiscal year 2007 that contributes to the
Department's success. They are to:
--Ensure equal opportunities for employees and applicants and equal
access for USDA customers.
--Ensure that equal employment opportunity and civil rights
complaints are processed timely, efficiently, and in a cost
effective manner.
--Increase USDA-wide awareness and use of Alternative Disputes
Resolution (ADR) for early resolution of civil rights
complaints and non-civil rights disputes.
--Establish effective outreach programs in USDA.
FISCAL YEAR 2007 KEY OUTCOMES
The Office of Civil Rights plans to achieve the following key
outcomes in fiscal year 2007: (1.) A reduced number of equal employment
opportunity and civil rights program complaints. Increasing the
education and awareness of civil rights is likely to decrease the
number of EEO and civil rights program complaints filed. (2.) Efficient
and cost effective processing of equal employment opportunity and civil
rights program complaints within the regulatory timeframes. (3.) Timely
and effective resolution of a larger number of civil rights and non-
civil rights complaints through increased awareness and use of
Alternative Dispute Resolution. (4.) Effective outreach programs in
every agency. Strengthening the agencies' outreach efforts, developing
outreach policies, and providing training on best outreach practices to
ensure timely access to all customers, thereby improving minority and
underserved population participation in USDA programs.
FISCAL YEAR 2007 BUDGET REQUEST
The fiscal year 2007 Appropriation request for the Office of Civil
Rights is $22.7 million. This is an increase of $2.7 million over
fiscal year 2006. The funding request includes increases for the
following:
--Civil Rights Enterprise System Improvement--$1.987 million.--Funds
for the Civil Rights Enterprise System are requested to
continue the expansion of the complaints processing system.
USDA agencies will be able to interface on a web-based system
that will provide customers and employees real-time data
regarding their discrimination complaints.
--Compliance Monitoring Activities $0.354 million.--The Office of
Civil Rights is mandated to conduct compliance reviews in the
employment and program division. However, funding is needed to
meet new requirements designed to meet the affirmative
employment goals of the Equal Employment Opportunity
Commission's Management Directive 715. Compliance reviews will
result in civil rights complaint prevention and reduction.
--Pay cost $0.401 million.--The request for pay cost is for the
anticipated fiscal year pay raise.
I would like to emphasize the importance of the Committee's
approval of the President's $22.7 million budget for USDA's Office of
Civil Rights. The proposed budget will help ensure that USDA continues
progress in providing fair and equitable delivery of its services and
programs to our customers and also protects the civil rights of USDA
employees.
______
Prepared Statement of Peter J. Thomas, Deputy Assistant Secretary,
Department of Administration
Mr. Chairman and members of the Subcommittee, I want to thank you
for the opportunity to submit this statement supporting the President's
budget proposal for fiscal year 2007 for the Department of
Agriculture's (USDA) Departmental Administration.
Departmental Administration (DA) is responsible for a wide range of
activities. Our mission is to promulgate Department-wide policies in
areas such as Human Resources, Procurement, Property Management,
Ethics, Security, and similar key administrative areas. DA also
provides comprehensive facilities support services for the owned and
leased offices that USDA has throughout the National Capital Area.
Furthermore, DA directly provides the Secretary, his Subcabinet, and
the principal staff offices with a full suite of administrative
support. Because of DA's direct responsibilities over USDA's
headquarters operations, and its policy oversight of USDA's vast
property and human assets, it is also responsible for providing
security both for worksites and, more importantly, for the employees
housed in those worksites. Since September 11, 2001, DA has, largely
using funds provided in the 2002 homeland security supplemental
appropriations, greatly enhanced its protection of USDA's staff and its
critical infrastructure.
My statement covers three appropriations: The Departmental
Administration Direct Appropriation, which funds most of our offices;
the Agriculture Buildings and Facilities and Rental Payments
Appropriation for the National Capital Area facilities and rental
payments to the General Services Administration (GSA) for space
occupied nationwide by USDA agencies except the Forest Service; and the
Hazardous Materials Management Appropriation which funds clean-up
activities under the Comprehensive Environmental Response,
Compensation, and Liability Act (CERCLA). I would like to address the
Agriculture Buildings portion first since our South Building renovation
project, a key priority, is funded from this source.
AGRICULTURE BUILDINGS AND FACILITIES
The fiscal year 2007 budget request for Agriculture Buildings and
Facilities and Rental Payments of $209.8 million includes $155.9
million for rental payments to GSA and, $53.9 million for operations,
maintenance, repair, and security of our existing four-building
headquarters' facilities, including $14.1 million towards repairing and
renovating the aging South Building.
Consistent with our goal to ensure a safe and functional USDA
workplace, the $14.1 million funding to continue the repair and
renovation of the South Building is critical. Funding for this project
was not available in fiscal years 2004--2006 and it is important to
resume funding for these renovations. This is a massive, multi-year
project, and every year that we lose lengthens the period during which
6,500 employees and thousands of visitors per year are exposed to
health and safety hazards. The project began in 1998 and was designed
to be accomplished in eight phases. Three phases have been completed
and are occupied. Design of Phase 4A and construction of the new mail
center facility began in September 2004. Among other things, critical
work is being done on fire protection systems, abatement of hazardous
materials and replacement of aged, unreliable and inefficient utility
systems. The requested fiscal year 2007 funding will allow USDA to
conclude construction of Phase 4 and to design Phase 5.
DEPARTMENTAL ADMINISTRATION DIRECT APPROPRIATION
The fiscal year 2007 request for the Departmental Administration
(DA) Direct Appropriation is $28.3 million. We have made significant
progress in a number of areas funded by the Departmental Administration
Direct Appropriation, and I would like to outline some of them here and
explain our proposals for continued improvement in fiscal year 2007.
PHYSICAL SECURITY
As previously discussed, physical security in the National Capital
Region is addressed within the Agriculture Building and Facilities
Appropriation. DA also has responsibility for physical security policy
for USDA owned and leased facilities worldwide. USDA conducts its
programs in approximately 25,000 structures at more than 7,000 sites
around the world. The Office of Procurement and Property Management
within DA provides overall leadership and direction to USDA agencies in
the management and coordination of security for these facilities. Major
activities include policy development, education and training, and
security assessments of facilities.
After September 11, USDA understood there was a need to rethink the
way it had historically approached physical security enhancements at
its facilities. Given the number of buildings and sites at which USDA
conducts its business and the finite resources available, we needed to
find a process that would link available resources to our most critical
needs and priorities. Partnering with each of our agencies, we
developed an inventory of mission critical facilities where we should
first focus our security efforts. Among the sites reviewed were labs
conducting research involving biohazardous materials; labs responsible
for protecting the Nation's food supply; facilities housing valuable
germplasm collections; labs in foreign countries; USDA computer centers
processing payroll, vendor, and program payments; and facilities
housing aircraft. We hired a small staff of physical security
specialists and retained contractors to perform security assessments at
our critical facilities using a risk-management approach advocated by
the Government Accountability Office. We also retained contractors to
install security enhancements and develop a database, the Geographic
Security Information System, to help us manage and track the progress
in enhancing security to our mission critical facilities at the various
locations. Following the guidance within Homeland Security Presidential
Directive (HSPD) 7, this database was integrated into a Geographical
Information System. To date we have completed security assessments at
approximately 90 percent of ``mission critical'' facilities. We have
also developed a comprehensive manual that provides our agencies with
standards and guidelines as we continue to assess and improve our
security posture with regard to: chemical, biological and radiological
agents; information technology; food safety; animal and plant research;
water resources; and aviation assets.
In accordance with HSPD 7 (facility security assessment required)
and HSPD 9 (facility security assessment conducted every 2 years), USDA
is developing a self-assessment tool to be used by facility managers at
any USDA location. This tool will serve as standard guidance for
managers of smaller offices and facilities across the country. The site
directors at these smaller facilities will have the capability to
remotely provide critical site-specific security information to a
security analyst in one central office and then be provided security
guidance for their site. This guidance will enhance the protection of
their facility and mission critical assets.
In late 2005, DA began implementing HSPD-12 (Smart Card), following
OMB and USDA guidance, for Personal Identification Verification (PIV).
Under PIV, all new employees and new contractors must have a successful
fingerprint processed by the FBI and a successful ``National Agency
Check with Inquiries'' (NACI) by Office of Personnel Management (OPM),
in order to receive a permanent badge with access rights to Federal
facilities. In fiscal year 2006, the Office of Operations within DA
provided guidance to all USDA agencies in the National Capital Region
on issuing identification badges for new employees and contractors. DA
will be determining which current USDA employees need to have a NACI
processed in order to receive their permanent badge. This will be
completed following a set schedule over the next 2 years. DA procedures
are in full compliance with HSPD-12 PIV Stage I.
CONTINUITY OF OPERATIONS PLANNING
DA continues to be an active participant in the Continuity of
Government (COG) and Continuity of Operations (COOP) programs in the
Department. One of our primary functions is to review the Department's
and USDA agencies' COOP Plans on a regular basis to ensure
responsiveness to current threat situations. To ensure plan viability,
formal revision of all USDA COOP Plans will continue as a biennial
requirement. In order to maintain readiness, USDA continues to conduct
functional exercises and planning workshops. In fiscal year 2005,
revisions to the USDA Headquarters COOP Plan were based on the updated
Federal Preparedness Circular 65 requirements to develop devolution,
reconstitution, and human capital plans. A functional exercise was
conducted in June 2005 to disseminate lessons learned from the previous
planning cycle. USDA had a robust participation in an interdepartmental
exercise conducted in late June 2005. In fiscal year 2006, the USDA
Headquarters plan will be revised to include pandemic influenza
planning, refinement of devolution, reconstitution and human capital
plans will continue, functional exercises will consist of a major
interagency COOP exercise, evaluation of agency-sponsored exercises and
COOP activities, Department-wide COOP awareness training, and the
beginning of a formal revision of the HQ COOP Plan and agencies'
supplements. In addition, support to the National Emergency Management
Team will continue. In fiscal year 2007, agency supplement COOP plans
will be formally reviewed; functional exercises will consist of testing
pandemic influenza planning and participation in a major interagency
COOP exercise, evaluation of agency-sponsored exercises and COOP
activities, and the continuation of Department-wide COOP awareness
training. Our fiscal year 2007 request includes $760,000 to ensure USDA
is compliant with Executive Orders and Presidential Directives dealing
with Emergency Preparedness and the requirements for Federal Executive
Branch Continuity of Operations. With this increase, DA will have the
funding needed to maintain the COOP for the Office of the Secretary,
provide guidance and training to mission areas, and provide support and
training to USDA's National Emergency Preparedness Team.
PERSONNEL AND INFORMATION SECURITY
USDA will continue to improve the personnel security program in
fiscal year 2007 through re-engineering and modernization efforts. The
fiscal year 2005 in-house adjudication and processing time averaged 22
workdays after receipt of the final background investigation report.
These efforts are closely aligned with the President's Management
Agenda eGovernment Initiative ``e-QIP'' (electronic processing of
security questionnaires). Key Departmental personnel are now fully
trained and capable of using the e-QIP system to electronically submit
investigative requests. This system has resulted in further
improvements in staff efficiency and additional reductions in
processing and handling time for personnel security cases. Restoring
our personnel security program has increased the reliability of public
trust positions and ensures that staff members are cleared for national
security classified information in positions needing such access.
Annually, the Department requires approximately 2,400 investigations
and reinvestigations each year to maintain the currency of its
employees.
USDA revitalized an information security assurance program intended
to safeguard national security information. The post-September 11
environment has made it clear that all Federal agencies have to make
sure that national security information is properly safeguarded. Adding
further importance, the USDA has been granted original classification
authority to classify national security information to the secret
level. To implement an effective program to safeguard this information,
USDA has added information security specialists to the staff, launched
an information security web site, drafted a security classification
guide, briefed senior leadership on national security classification,
and provided supplemental training to managers and front line staff.
Finally, USDA established an inter-agency work group that includes nine
additional Departments/agencies to address common issues, including
development of an automated on-line security awareness refresher
briefing for government-wide use
The fiscal year 2007 request includes an increase of $1,840,000 to
provide funds to ensure the Personnel and Document Security Program is
operational and compliant with the Executive Orders and Presidential
mandates. USDA plans include: development of training programs for
employees who have security clearances; meeting the requirement that
adjudicative results are furnished to the Office of Personnel
Management within 90 days of receipt of a closed background
investigations; and operating and maintaining an enterprise data base
on national security clearances issued by the Department.
HUMAN CAPITAL MANAGEMENT
The Office of Human Capital Management (OHCM) in DA provides policy
guidance to USDA agencies on human capital management, one of the five
initiatives of the President's Management Agenda. USDA faces a number
of human resources challenges. Over the next few years, it is
anticipated that an unprecedented number of executives and managers
will retire, as will many of our cadre of researchers, veterinarians,
and other critical professionals. Our workforce must be competent,
reliable and dedicated to new business and scientific challenges in
research, food safety, trade, and agricultural production and
conservation. During fiscal year 2005, this office published the
Strategic Human Capital Plan that set direction and frameworks for
measuring accomplishments achieved in workforce planning, employee and
leadership development, recruitment and retention, and performance
management. USDA agency plans provide workforce assessments and
strategies to narrow skill gaps in agency mission critical occupations,
and link them to recruitment, hiring, and retention strategies to help
meet succession plans. OHCM and other USDA agencies are developing an
annual Recruiting Plan, including an evaluation process for cost-
effectiveness to improve hiring and recruitment strategies. OHCM is
leading USDA to strengthen its performance appraisal programs by
aligning individual employee performance expectations with agency
goals. As of the fourth quarter of fiscal year 2005, over 60 percent of
USDA's employee performance plans are aligned with agency goals, as
reflected in the PMA scorecard for human capital.
Departmental Administration is requesting an increase of $2,348,000
for providing support to policies and technical guidance for
enhancements to HR performance programs. DA plans to review the current
performance systems in USDA and evaluate possible alternatives that are
available to Federal employees. More emphasis will be placed on
contemporary performance-based solutions rather than historic
processes.
ENTERPRISE HUMAN RESOURCES SYSTEM
In order to secure the benefits of improved human resources
management programs and to capture the data needed for workforce
planning and organizational restructuring, DA has committed to building
a Department-wide Human Resources Enterprise System (HRES). The system
holds great promise to unify the manner in which agencies process
personnel transactions, provide more timely and consistent workforce
information, and enable improved management of USDA's Human Capital. In
our commitment to building a Department-wide HRES, DA is actively
engaged in the Department-wide implementation and deployment of
Automated Recruitment Web-based Systems to streamline the hiring
process to meet the 45 day hiring model set forth by OPM in order to
meet the requirements of the Recruitment One-Stop initiative under the
Presidential Management Agenda for eGovernment. DA is actively
participating in other OPM Presidential Management Agenda initiatives
including the Human Resources Line of Business to fulfill the vision of
an HR shared service center complete with common solutions to
standardized HR business processes, and the implementation of the
Enterprise Human Resources Integration suite of products. DA is also
collaborating with mission areas and staff agencies on the feasibility
of a Department-wide web-based Worker's Compensation system with a
direct link to the Department of Labor in an effort to meet the
requirements of the President's ``Safety, Health and Return to Work''
initiative.
GOVERNMENT ETHICS PROGRAM
The Office of Ethics succeeded in reviewing virtually all of the
nearly 1,000 financial disclosure reports submitted by USDA officials
in a timely manner. We have implemented a web-based ethics training
program that is used throughout the Department and in several Executive
Branch organizations outside USDA. The majority of these training
modules were migrated to AgLearn in fiscal year 2005. The Office of
Ethics has developed an Ethics Orientation module for new USDA
employees. The module is in a final testing phase and will be available
in 2006. Also in final stages of testing is a self-service ``walk
through'' guide to post-employment. More than 98 percent of the USDA
employees required to submit financial disclosure reports completed
ethics training in 2005.
PROCUREMENT POLICY
DA continues to lead the implementation of the Integrated
Acquisition System (IAS). IAS is a web-based commercial off-the-shelf
procurement and contract management generation and administration tool.
It provides USDA with an enterprise solution for requisitioning,
automated workflow, commitment accounting, funds control, and contract
closeout functions used by the procurement and financial communities.
Additionally, it provides real-time interface to the Department's
financial system in accordance with the Joint Financial Management
Improvement Program. IAS supports e-Government legislation,
Presidential Initiatives to improve the operation of government, and
complements the Federal Integrated Acquisition Environment. Several
USDA agencies have been implemented and we are working toward full
deployment across the Department by the end of fiscal year 2006.
USE OF BIOFUELS
The Department's continuing commitment to biofuels resulted in an
estimated 207,600 gasoline gallon equivalents of biofuels (ethanol and
biodiesel) used in USDA fleet vehicles, equipment, and facilities in
fiscal year 2005 an increase of 72 percent over fiscal year 2004. Use
of E85 ethanol fuel reached a new high in fiscal year 2005, to 179,625
gallons. This continued increase is a successful result of the E85
promotion program USDA initiated in fiscal year 2003, which included
awareness training for Departmental headquarters and field fleet
managers, providing them with E85 bumper stickers and other materials
for use with USDA's ethanol-gasoline flexible fuel vehicles. USDA's
flex-fuel E85 fleet inventory grew from 3,079 vehicles in fiscal year
2004 TO 3,267 vehicles in fiscal year 2005. In fiscal year 2006, USDA
is focusing on further increasing the use of B20 biodiesel and E85
ethanol as a prime strategy to meet the new alternative fuel use
requirements of the Energy Policy Act of 2005 and the Executive Order
13149 of 20 percent petroleum reduction target for fleet vehicles.
FEDERAL BIOBASED PRODUCTS PROCUREMENT PREFERENCE PROGRAM
Section 9002 of the 2002 Farm Security and Rural Investment Act of
2002 (Public Law 107-171) directed the USDA to develop and implement a
procurement preference program for biobased products. DA is leading the
design, development, testing, and USDA implementation of what is now
known as the Federal Biobased Product Preferred Procurement Program
(FB4P). The FB4P will consist of:
--a biobased product preference program; and
--a biobased product procurement promotion program. Section 9002 of
the 2002 Farm Security and Rural Investment Act of 2002 (Farm
Bill) (Public Law 107-171) mandates Federal agencies to have a
biobased product procurement preference program in place within
1 year after guidelines pertaining to procurement preferences
for these products are published. These guidelines were
published as a final rule in the Federal Register on January
11, 2005.
On January 10, 2006, USDA completed its Affirmative Procurement
Program (APP) and posted it on its biobased website at http://
www.usda.gov/biobased. The APP formally establishes USDA's Biobased
Procurement Program for USDA-designated biobased items and provides
agency-wide guidance for implementing an effective program. USDA's
Biobased APP ensures items composed of biobased material will be
purchased to the maximum extent practicable and meets the requirements
of the final rule. The APP will also serve as the government-wide model
to achieve the Section 9002 goals of the 2002 Farm Bill. Early in
fiscal year 2006, USDA conducted a 3-month Biobased Pilot Project
designed to test biobased/biodegradable food-service products such as
cups, plates, cutlery, etc. During the pilot, over 33,000 patrons were
served and cafeteria operations and services were not adversely
impacted by the change to biobased products. The full-cycle approach of
the pilot project: (1) replaced 100 percent of current Styrofoam and
plastic food service items with biobased products wherever possible;
(2) provided training to patrons on how to dispose of waste to prevent
contamination with non-compostables and to compost the cafeteria
residuals; (3) diverted cafeteria-derived organic recyclables from
landfill disposal to a beneficial horticultural use; and (4) resulted
in the production of over 44 cubic yards of compost to be used in the
Whitten Building gardens. Overall USDA considers the pilot a success
and will continue to promote biobased products in the future.
REAL PROPERTY ASSET MANAGEMENT
USDA is proactively implementing Executive Order 13327, Federal
Real Property Asset Management, which establishes a Presidential
Management Initiative promoting the efficient and economical use of
America's real property assets to assure management accountability for
implementing Federal real property management reforms. USDA will focus
on six major areas as the foundation for future efforts and compliance:
real property management organization; real property planning and
budgeting activities; utilization of inventory data in decision-making;
performance measures and continuous monitoring asset inspection and
condition index; and divesting ourselves of un-needed real property.
In fiscal year 2004, USDA designated a Senior Real Property Officer
(SRPO) to oversee implementation of this Executive Order. The SRPO
established a Real Property Council within USDA to assist with this
effort. By the end of fiscal year 2006, USDA will have an Asset
Management Plan, incorporating final guidance provided by the Federal
Real Property Council, in place and will have established a strategy
for implementation of the performance measurements to achieve the goals
and objectives outlined in the Asset Management Plan. USDA's goal is to
achieve a yellow rating on the President's Management Agenda Asset
Management scorecard in fiscal year 2006.
USDA initiated a major corporate project to implement the first
department-wide real property automated information system to improve
management controls and accountability. This new department-wide
system, Corporate Property Automated Information System (CPAIS), which
was implemented in May 2004, provides an integrated solution, which
standardizes USDA real property accounting (subsidiary ledger to the
Foundation Financial Information System (FFIS)), real property business
processes and provides management of the entire real property portfolio
including owned real property, commercial leases, and General Services
Administration assignments. In fiscal year 2006 and 2007, USDA will
integrate personal property into CPAIS, thereby eliminating old legacy
systems, and managing its assets to make maximum use of resources
provided.
EXCESS PERSONAL PROPERTY PROGRAM
Section 923 of the Federal Agriculture Improvement and Reform Act
of 1996, authorized the Secretary of Agriculture to transfer excess
Federal personal property to any of the 1994 Tribal Institutions,
Hispanic-Serving Institutions, and the 1890 colleges and universities,
including Tuskegee University. In fiscal year 2005, USDA transferred
$2.3 million worth of excess personal property under the program,
bringing the total to greater than $20.9 million since the program
began in fiscal year 1998. This program provides much needed property
and equipment to institutions that otherwise would not be able to
acquire property due to limited funds and will improve the
institutions' capability in the areas of research, education, and
technical and scientific activities.
SMALL & DISADVANTAGED BUSINESS UTILIZATION
USDA is a leader in the Federal Government in achieving small
business program contracting goals. The Office of Small and
Disadvantaged Business Utilization (OSDBU) utilizes an active outreach
program to identify available small, small and disadvantaged,
Historically Underutilized Business Zone (HUB Zone), service disabled
veteran-owned, and women-owned businesses; to expand the number of
small businesses securing contracts with USDA; to identify and provide
assistance to underserved areas; and to identify and eliminate
contracting barriers that prevent or restrict small business access to
USDA procurements. During fiscal year 2005, OSDBU was the winner of two
prestigious awards from the Small Business Administration: the Federal
Gold Star Award and the Agency Goaling Award of Excellence. These
awards recognize the exemplary performance of USDA agencies for
attaining or exceeding the federally mandated small business goals that
grow small business capacity and create jobs.
OSDBU is aggressively taking steps to significantly increase
contracting and subcontracting opportunities for Service Disabled
Veteran-Owned Small Businesses and to carry out the requirements of
Executive Order 13360 and Public Law 108-183--The Veterans Benefits Act
of 2003. OSDBU is tracking the Service Disabled Veteran-Owned Small
Business goal achievement for all USDA agencies. OSDBU continues to
work with USDA agencies to secure contracts for Service Disabled
Veteran-Owned Small Businesses.
In addition, OSDBU continues its rural small business outreach
efforts to increase small business opportunities and create jobs in
rural areas. Small firms are paired in mentor-protege relationships
with experienced Federal contractors to engage in USDA and other
Federal Departments' contracting opportunities. OSDBU reviews contract
opportunities to locate those suitable for directing to Tribal 8(a)s
and other categories of small firms in rural America.
Another important aspect of OSDBU's work is our support for people
with severe disabilities working through the Javits-Wagner-O'Day (JWOD)
program. The JWOD Program helps to meet Federal procurement needs while
generating employment and providing training opportunities for
Americans who are blind or have other severe disabilities. USDA's
demand for JWOD products has grown over the past several years to
include packaged food products that support USDA food programs inc
HAZARDOUS MATERIALS MANAGEMENT
The purpose of the Hazardous Materials Management Program is to
clean up and restore USDA-managed lands, and sites contaminated from
past USDA activities; to enhance USDA's environmental performance in
current operations; and to participate in Federal, State, and local
efforts to plan for and respond to hazardous materials incidents. Since
the Hazardous Materials Management Appropriation was established in
1988, USDA has cleaned up over 2,250 sites. Many of these were
underground storage tanks that did not meet current standards. On
average, the program is completing about 30 site cleanups a year
through a combination of Hazardous Materials Management Appropriation
and agency funding.
We currently estimate that uncontrolled releases of hazardous
substances have occurred or may have occurred at more than 2,000
additional sites. Many of these contaminated sites threaten human
health or the environment, and make valuable resources unavailable for
public use. Addressing these sites will, in general, be more complex
and costly than those we have cleaned up so far.
Program activities are aligned with USDA's Strategic Goal 6: to
protect and enhance the Nation's natural resource base and environment.
In addition, the program directly supports three USDA Objectives: (1)
homeland security, through efforts to improve hazardous materials
management and by representing USDA on the National Response Team for
oil spills and hazardous material releases, and participating in the
National Response Plan's Emergency Support Function 10 and 11, (2)
management of natural resources, and (3) the quality of life in rural
America by coordinating USDA efforts for the President's Brownfields
program. This year our performance focus will shift from the number of
cleanups we complete to the significance of the public benefits the
cleanups create and the impact they have in relation to USDA and agency
missions, goals, and program initiatives. The fiscal year 2007 budget
seeks $12.0 million to continue this program.
CONCLUSION
Although administrative programs such as those conducted within DA
are frequently not thought of by themselves usually considered, high
visibility or high priority, Mission-area programs, cannot effectively
meet the expectations of the Congress, the Administration or the public
without a stable base of good administrative systems, policies and
support functions. DA is committed to achieving and maintaining a high
quality of mission program support and asks your assistance in this
effort. Mr. Chairman and members of the Subcommittee, this concludes my
statement on the Departmental Administration Budget for fiscal year
2007.
______
Prepared Statement of Nancy C. Pellett, Chairman and Chief Executive
Officer, Farm Credit Administration
Mr. Chairman, Members of the Subcommittee, I am Nancy C. Pellett,
Chairman and Chief Executive Officer of the Farm Credit Administration
(FCA or Agency). On behalf of my colleagues on the FCA Board, Doug
Flory of Virginia and Dallas Tonsager of South Dakota, and all the
dedicated men and women of the Farm Credit Administration, I am pleased
and honored to provide this testimony to the Subcommittee.
At the FCA we are focused on ensuring a dependable source of credit
and related services for agriculture and rural America as we maintain a
flexible regulatory environment that allows the cooperative Farm Credit
System to meet the credit needs of all eligible borrowers while
ensuring safety and soundness.
I would like to thank the subcommittee staff for its ongoing
assistance during the budget process, and before I discuss the role and
responsibility of the Farm Credit Administration and our budget
request, I would respectfully bring to the Subcommittee's attention
that the FCA's administrative expenses are paid for by the institutions
that we regulate and examine. Said differently, the FCA does not
receive a Federal appropriation, but is funded through annual
assessments on Farm Credit System (System) institutions and the Federal
Agricultural Mortgage Corporation (Farmer Mac). We fully support the
proposed 2007 Budget Submission of the President.
Mr. Chairman and Members of the Subcommittee, I will highlight the
FCA's accomplishments during the past year; report to you briefly on
the System, as well as Farmer Mac--the other Government-Sponsored
Enterprise (GSE) that we regulate which serves agricultural lenders in
the secondary market; and, in conclusion, I will present our fiscal
year 2007 budget request.
MISSION OF THE FARM CREDIT ADMINISTRATION
As directed by Congress, the FCA's mission is to ensure a safe,
sound, and dependable source of credit and related services for
agriculture and rural America.
The Agency accomplishes its mission in two important ways. First,
FCA ensures that the System and Farmer Mac remain safe and sound and
that they comply with the applicable law and regulations. Specifically,
our risk-based examinations and supervisory strategies focus on an
institution's financial condition and any material existing or
potential risk, as well as its board's and management's abilities to
direct its operations. Supervisory strategies also evaluate each
institution's efforts to serve all eligible borrowers, including young,
beginning, and small farmers and ranchers.
Secondly, the FCA approves corporate charter changes, and
researches, develops, and adopts regulations, policies, and other
guidelines that govern how System institutions conduct their business
and interact with their customers. If a System institution violates a
law or regulation, or operates in an unsafe or unsound manner, we can
use our enforcement authorities to ensure appropriate corrective
action.
We constantly strive to maintain a regulatory environment that
enables System institutions and Farmer Mac to remain financially strong
so they can meet the changing demands of agriculture and rural America
for credit and related services. In doing so, our primary focus is to
ensure the long-term safety and soundness of the two GSEs that serve
rural America and to develop rules and policies that reflect changing
market forces.
Finally, the FCA Board is committed to maintaining the public's
trust and confidence in the Agency, the System, and Farmer Mac. The
public is invited to attend the FCA Board Meetings, and we are
committed to following the requirements of the Government in the
Sunshine Act.
The public can read on our Web site the comments received on
current proposed rules and notices published in the Federal Register.
Comments on regulations can also be submitted to the Agency
electronically or through regular mail.
FISCAL YEAR 2005 ACCOMPLISHMENTS
In 2005 we continued our efforts to achieve our Agency strategic
goals through: (1) responsible regulation and public policy, and (2)
effective risk identification and corrective action. The FCA has worked
hard to maintain the System's safety and soundness and is continually
exploring options to reduce regulatory burden on the FCS and ensure
that System institutions provide agriculture and rural America
continuous access to credit and related services.
To ensure that the FCA is appropriately focused on economic and
agricultural issues that are relevant to rural America, as well as to
ensure that the Agency is operating in an effective and efficient
manner, the FCA contracted with an independent consulting firm to
conduct an extensive strategic study of the Agency. Of particular
interest was the need to identify potential challenges that may arise
in agriculture, the Farm Credit System, or the marketplace over the
next 5 to 7 years and to realign the Agency where appropriate to enable
it to proactively address these issues. The major outcomes of the study
have been a realignment of the examination structure, a new team-
oriented approach in the regulatory development office, and a merging
of the major support functions of the Agency including technology,
financial, and human resource functions.
EXAMINATION PROGRAMS FOR FCS BANKS AND ASSOCIATIONS
One of the Agency's highest priorities is the development and
implementation of efficient and effective risk-based examination and
oversight programs that meet the high standards and expectations of the
Congress, investors in System debt obligations, the farmers, ranchers,
and cooperatives that own System banks and associations, and the public
at large. Our examination programs and practices have worked well over
the years and have contributed to the present safe and sound overall
condition of the System, but the results of our strategic study are
clear--we must evolve and prepare for the increasingly complex nature
of agricultural and rural America lending and financing. The FCA Board
adopted a new policy statement reaffirming its commitment to risk-based
supervision. This policy statement directs the maintenance of a ``risk-
based'' approach to oversight and examination for System institutions,
which will maximize our effectiveness and allow us to strategically
address the System's safety and soundness and compliance with laws and
regulations.
We have taken initial steps to implement the new policy statement
through realignment of our organizational structure. We believe the
changes in the System coupled with pending retirements and normal
attrition of staff necessitates a flexible organizational structure but
also provides a unique opportunity to prepare for the future. Toward
this goal, the Agency's Office of Examination (OE) is shifting its
regionally based field office structure to division examination teams
that are organized on a national basis. In the new structure, existing
office locations will be retained, but the examination programs will be
managed nationally to better match examiner skills to risks presented
by institutions.
On a national level, we actively monitor risks that may affect
groups of System institutions or even the entire System, including
risks that may arise from the agricultural, financial, and economic
environment in which the System institutions operate. Our job is not to
forecast specific events, but to understand the environment so that we
can take steps in advance to help System institutions take pre-emptive
actions before adverse trends develop.
The FCA uses a risk-based examination and supervision program to
differentiate the risks and special oversight needs of FCS
institutions. We set the scope and frequency of each examination based
on the level of risk in the institution. We continuously identify,
evaluate, and proactively address these risks. The Farm Credit Act
requires the Agency to examine each FCS institution at least once every
18 months. However, we monitor the performance of all FCS institutions
on an ongoing basis and conduct interim examination activities as risk
and circumstances warrant in each institution.
As part of our ongoing efforts, we monitor each institution's risk
profile. The Financial Institution Rating System (FIRS) is the primary
risk delegation used by the Agency to indicate the safety and soundness
threats in an institution. The rating system is similar to other
Federal financial regulators' CAMELS (capital, assets, management,
earnings, liquidity, and sensitivity) rating scale. FIRS ratings range
from 1 (for a sound institution) to 5 (for an institution that is
likely to fail). Beginning in 2006, in addition to FIRS, examiners will
use a new set of assessment criteria that focus on risk areas including
credit, interest rate, liquidity, operational, compliance, strategic,
and reputation.
Throughout fiscal year 2005, FIRS ratings as a whole continued to
reflect the stable financial condition of the FCS. The overall trend in
FIRS ratings continued to be positive, with nearly 4 times as many 1-
rated institutions (79 percent) as 2-rated institutions (21 percent).
Significantly, there were no 3-, 4-, or 5-rated institutions. In
addition, no FCS institutions were under enforcement action at the end
of fiscal year 2005 or during the previous 3 years and no FCS
institutions are in receivership. The overall financial strength
maintained by the System reduces the risk to investors in FCS debt, the
Farm Credit System Insurance Corporation (FCSIC), and FCS institution
stockholders.
Risks are inherent in lending, and managing risks associated with a
single sector of the economy, such as agriculture, is particularly
challenging for lenders. If the FCA discovers unwarranted risks, it
works with an institution's board and management to establish a plan of
action to mitigate or eliminate those risks. Appropriate actions may
include reducing risk exposures, diversifying its portfolio of risks,
increasing capital, or strengthening risk management. In those cases
where the board and management are unable or unwilling to take
appropriate action, the Agency has the authority to take a variety of
actions including supervisory letters, written agreements, and cease
and desist orders. In extreme cases, we also can remove management,
issue civil money penalties, and/or liquidate the institution.
During fiscal year 2005, FCA also performed various examination,
training, and other services for the Small Business Administration
(SBA), the United States Department of Agriculture (USDA), FCSIC, and
the National Cooperative Bank (NCB). Each of these entities reimburses
the FCA for its services. The safety and soundness of the System and
Farmer Mac remain our primary objectives. However, we believe the
continuing use of FCA examination resources by other agencies is a
positive reflection on the expertise of FCA examiners and serves to
broaden their examination skills while increasing job satisfaction and
employee retention. It also helps us defray some of the costs of our
operations while providing a valuable service.
REGULATORY ACTIVITY
Congress has given the FCA Board statutory authority to establish
policy and prescribe regulations necessary to ensure that FCS
institutions comply with the law and operate in a safe and sound
manner. The Agency's regulatory philosophy articulates our commitment
to establishing a flexible regulatory environment that enables the
System to offer high quality, reasonably priced credit to farmers and
ranchers, their cooperatives, rural residents, and other entities on
which farming operations depend. This translates into developing
balanced, well-reasoned, flexible, and legally sound regulations. We
strive to ensure that the benefits of regulations outweigh the costs;
to maintain the System's relevance in the marketplace and rural
America; and ensure that FCA's policy actions encourage member-
borrowers to participate in the management, control, and ownership of
their GSE institutions.
For 2005 and early 2006, the Agency's regulatory and policy
projects included the following:
--A rule to allow a qualified lender to obtain a waiver of borrower
rights when a loan is part of a loan syndication with non-
System lenders that are otherwise not required by the Farm
Credit Act to provide borrower rights.
--A capital adequacy preferred stock rule to amend the Agency's
preferred stock regulations, which are designed to ensure the
stability and quality of capital at System institutions, to
ensure the fair and equitable treatment of all shareholders of
FCS preferred stock, and to minimize the potential for insider
abuse.
--A capital adequacy risk weighting final rule to more closely match
the Agency's risk-based capital requirements with FCS
institutions' credit exposures. The changes make the FCA's
regulatory capital treatment more consistent with that of the
other financial regulatory agencies and address financial
structures and transactions developed by the market.
--A liquidity rule to amend the Agency's previous liquidity reserve
requirements for System banks. The purpose of the rule is to
ensure that System banks have adequate liquidity in the case of
market disruptions or other extraordinary situations, as well
as to improve the flexibility of Farm Credit banks to meet
liquidity reserve requirements and provide credit in all
economic conditions.
--A receivership repudiation final rule, specifying the conditions
under which the FCSIC will not attempt to pull back specific
assets into the conservatorship or receivership estate if a
transaction meets certain conditions.
--A bookletter issued by the Agency to all System institutions
providing guidance on how they can utilize the Tobacco Buyout
Program to meet their borrowers' financial needs by offering
them the option to immediately receive Tobacco Buyout contract
payments.
--A bookletter on bank director compensation limits that makes a one-
time adjustment to the bank director compensation limit to
allow System banks to pay fair and reasonable director
compensation for 2006.
--A final rule on governance of FCS institutions providing for
enhanced oversight of management and operations by
strengthening the independence of System institution boards and
incorporating best governance practices. The rule also supports
borrowers' participation in the management, control, and
ownership of their respective FCS institutions.
In addition, relative to Farmer Mac, the Agency finalized a rule
governing its investments and setting a liquidity standard and has
undertaken a proposed regulatory project to update the Farmer Mac Risk-
Based Capital Stress Test. The regulatory project is intended to
incorporate a more accurate reflection of risk in the model in order to
improve the model's output--Farmer Mac's regulatory minimum capital
level.
The Agency has also adopted an ambitious regulatory and policy
agenda for 2006 and anticipates pursuing a number of issues, including:
--Evaluating regulatory options for assessment and apportionment of
FCA administrative expenses.
--Continuing a pilot program that allows System institutions to make
investments that further support their mission of providing
credit to agriculture and rural America.
--Continuing to review current regulatory requirements governing
eligibility and scope of lending to determine if these
requirements are reasonable in light of agriculture's changing
landscape. Agency staff will identify issues and explore
options for the Board's consideration.
--Evaluating comments on a proposed termination rule that would amend
and update the existing regulations that govern the termination
of System status. Issues such as costs, timing, communication,
voter quorums, tax implications, directors' rights, equitable
treatment of dissenting stockholders, and overall effect on the
System are considered in the proposal.
--Considering regulatory changes for disclosure and reporting
requirements for System institutions. We approved a proposed
rule that is designed to improve the transparency of public
disclosures, strengthen board and management accountability and
auditor independence, and increase shareholder and investor
confidence in the System. The proposed changes reflect the
cooperative nature and unique structure of the System, while
incorporating the best industry practices of public companies
and recent changes in the reporting requirements of other
Federal financial regulators, provisions in the Sarbanes-Oxley
Act of 2002, and the Securities and Exchange Commission
regulations.
--Continuing the Agency's effort to streamline its regulations so the
System can more efficiently fulfill its mission to provide a
dependable source of credit to America's farmers, ranchers,
aquatic producers, cooperatives, and rural residents. We
approved a proposed rule to be published in March 2006 to
reduce regulatory burden on System institutions by repealing,
clarifying or updating current regulations.
--Continuing a study on loan syndications and assignment markets that
will help determine whether the Agency's approach to these
issues should be modified.
CORPORATE ACTIVITIES
The pace of System restructuring remained slow in fiscal year 2005.
The number of corporate applications submitted for FCA Board review and
approval during fiscal year 2005 declined to four applications,
compared with seven applications the prior year. As of January 1, 2006,
there were 109 Farm Credit System institutions, including 96
associations, five banks, and eight service corporations and special
purpose entities. Through mergers, the number of FCS associations has
declined by 28 percent over the previous 5 years (37 associations) and
the number of FCS banks has dropped by 29 percent (2 banks). Generally,
these mergers have brought larger, more cost efficient, and better
capitalized institutions with a broader, more diversified asset base,
both by geography and commodity. The Agency estimates that within the
next 5 years, the process of expansions and mergers will result in an
increase in the size and complexity of System entities, with the
average association exceeding $1 billion in assets.
STRATEGIC PLANNING AND PERFORMANCE PLANS
The FCA Strategic Plan for fiscal years 2004 through 2009 guides
the Agency's long range efforts. The FCA Board adopted the strategic
plan unanimously and believes that it is vital to achieving the
Agency's mission and goals by providing all staff with a clear focus
and direction as well as prioritizing the issues, functions, and
programs that require an investment of resources.
During fiscal year 2005, our work focused on implementing
initiatives to accomplish FCA's three strategic goals and on measuring
the Agency's performance. Goal 1 is our public mission of ensuring that
the FCS and Farmer Mac fulfill their public mission for agriculture and
rural areas. Goal 2 is evaluating risk and providing timely and
proactive oversight to ensure the safety and soundness of the FCS and
Farmer Mac. Goal 3 is implementing the President's Management Agenda.
In order to meet the goals of the strategic plan, the Agency continues
to comply with the Government Performance and Results Act of 1993 by
integrating the budgeting process into the planning and performance
management process. We link performance goals with resource needs, so
that we are in a better position to use the strategic plan to align the
organization and budget structures with our mission, goals, and
objectives. Other Activities and Accomplishments
I would also like to note a few other Agency activities and
accomplishments for 2005. First, an audit of the FCA's fiscal year 2005
financial statements has been completed and I am pleased to report
that--for the 12 year in a row--we have received an unqualified audit
opinion.
Second, for the fifth consecutive year, FCA's annual Federal
Information System Management Act review reported no significant
weaknesses in our information security program. We have, in the past
year, taken several measures to strengthen our information security
program. These measures include ensuring secure transmission of
sensitive information over the Internet by providing our staff with an
option to encrypt sensitive e-mail sent over the Internet. We also
provided our computer users the capability to encrypt a portion of
their portable storage devices for protection of sensitive stored
information.
Third, we continue to improve our ability to ensure continuity of
our operations through refining our business continuity plan and
through testing our disaster recovery plan. We also focused on business
continuity and disaster recovery planning with the Farm Credit System
through a series of visits to FCS banks and data centers. During these
visits we encouraged membership in the Financial Services Information
Sharing and Analysis Center (FS/ISAC) and sponsored FCS institutions'
membership in the Government Emergency Telecommunications System
(GETS). The FS/ISAC is an organization that provides information
security and threat assessment information across the financial sector.
The GETS provides priority access to landline telecommunications to
support response in the event of an emergency.
Fourth, we continue to develop our e-government capabilities. Our
accomplishments in the area of e-government include:
--A redesign of our Web site to be more user-friendly and more easily
navigable.
--Implementation of the use of electronic signature to facilitate the
approval process among geographically--dispersed staff.
--Enhancement of the ability of Farm Credit System institutions to
easily and securely transfer examination-related information to
FCA examination staff.
During fiscal year 2005 we:
--Implemented a machine-readable privacy policy on our Web site.
--Enhanced the FCA Exam Manual on our Web site by adding a section on
Information Technology.
--Established a process for collecting survey data from FCS
institutions on our Web site.
--Established a process to begin sending bookletters and
informational memorandums via electronic means to System
institutions.
CONDITION OF THE FARM CREDIT SYSTEM
I will now turn to the condition of the Farm Credit System. I am
pleased to report that the System's overall condition and performance
was solid and steady during 2005. Capital levels continued to increase,
mostly through retained earnings and stock sales. Asset quality
remained high, loan volume growth was strong, and favorable credit
quality enabled the System to achieve $2.096 billion in earnings for
the 12 months ended December 31, 2005. By and large, the System has
knowledgeable and experienced managers at all levels.
The FCS is fundamentally sound in all material respects, and it
continues to be a financially strong, reliable source of affordable
credit to agriculture and rural America. The quality of loan assets,
risk-bearing capacity, stable earnings, and capital levels collectively
reflect a healthy Farm Credit System.
Loan volume continued to grow during 2005 while loan quality
remained high. Gross loans increased by 10.3 percent to $106.3 billion.
The level of nonperforming loans, including nonaccrual loans, decreased
to 0.56 percent of gross loans. Delinquencies also remained minimal.
Since 1993, the System has steadily earned more than $1 billion
each year. This has resulted in a capital position that is at an all-
time high. We believe this level of capital should enable the System to
remain a viable and dependable lender to agriculture and rural America
during any near term downturns in the agricultural economy.
Despite an increase in total capital, the amount of total capital
as a percentage of total assets declined from 17.1 percent to 16.3
percent as of December 31, 2005. This was due to the substantial
increase in loan volume. However, despite the increased loan volume,
all institutions continued to exceed their minimum regulatory capital
requirements, remaining well-capitalized. Permanent capital ratios at
System banks and associations ranged from a low of 11.1 percent to a
high of 28.9 percent--all well above the 7.0 percent minimum regulatory
capital requirement.
While the overall condition of the System continued to improve
during 2005 and remains strong, I also must offer a cautionary note
regarding several risks that could adversely affect borrower repayment
capacity in the future:
--Two major cost risks--high and volatile energy costs and rising
interest rates--reduce borrower incomes and increase lender
credit risks.
--Government payments to agricultural producers have accounted for
between 16 percent and 40 percent of net cash farm income in
recent years. Reductions in farm subsidy payments could have a
significant impact on farm incomes and on farmland values,
especially in areas dependent on farm program crops.
--Outbreaks of animal and plant diseases, especially Avian Influenza,
and concerns over possible terrorist attacks on the food supply
could increase costs and reduce access to export markets.
--The structure of agriculture and rural America is changing in many
ways and thus so is the nature of the System's market place.
While the System's financial health is not threatened, it will
be challenged as it adjusts to serving the changing needs of
customers whose livelihood is increasingly dependent on the
off-farm economy.
FEDERAL AGRICULTURAL MORTGAGE CORPORATION
The FCA also has oversight, examination, and regulatory
responsibility for the Federal Agricultural Mortgage Corporation, which
is commonly known as Farmer Mac. Congress established Farmer Mac in
1988 to provide secondary market arrangements for agricultural mortgage
and rural home loans. In this capacity, Farmer Mac creates and
guarantees securities and other secondary market products that are
backed by mortgages on farms and rural homes. Through a separate office
required by statute (Office of Secondary Market Oversight), the Agency
examines, regulates and monitors Farmer Mac's disclosures, financial
condition, and operations on an ongoing basis and provides periodic
reports to Congress.
Like the Farm Credit System, Farmer Mac is a Government-Sponsored
Enterprise devoted to agriculture and rural America. The FCA and the
financial markets recognize Farmer Mac as a separate GSE from the
System's banks and associations. Farmer Mac is not subject to any
intra-System agreements or to the joint and several liability of the
FCS banks, nor does the Farm Credit System Insurance Fund back Farmer
Mac's securities. However, by statute, in extreme circumstances Farmer
Mac may issue obligations to the U.S. Treasury Department to fulfill
the guarantee obligations of Farmer Mac Guaranteed Securities.
The majority of Farmer Mac's common stock is publicly traded on the
New York Stock Exchange. (In contrast, the cooperative Farm Credit
System institutions are owned by their member-borrowers and their
common stock is not publicly traded.) Accordingly, Farmer Mac is
subject to certain Securities and Exchange Commission regulatory
requirements and must file comprehensive disclosures that are available
to its shareholders and the general public.
Generally, secondary market GSEs, including Farmer Mac, operate at
lower capital ratios than primary market lenders in recognition of
differences in their risk profiles, as their business is targeted to
specific types and quality of loans. Accordingly, regulating and
monitoring Farmer Mac's capital and risk management are central
components of FCA's oversight activities.
In conclusion, FCA is proud of its efforts and accomplishments in
promoting a constructive and dependable source of credit to farmers,
ranchers, and their cooperatives. We will remain vigilant in our
efforts to ensure that the Farm Credit System and Farmer Mac remain
financially strong and focused on serving agriculture and rural
America.
FISCAL YEAR 2007 BUDGET REQUEST
Earlier this fiscal year, the Agency submitted a proposed total
budget request of $45,500,000 for fiscal year 2007, which is the same
as our fiscal year 2006 total budget request. The Agency's proposed
budget includes an assessment on System institutions for fiscal year
2007 of $40,500,000, the same as the fiscal year 2006 assessment. The
total amount of assessments collected from the FCS and Farmer Mac with
carryover funds equals $44,250,000. Since approximately 83 percent of
the Agency's budget goes for salaries, wages, and related costs, almost
all of the total budget amount will be used for these purposes.
While the budget presented to you today is our best estimate of our
future needs, it is just that--an estimate. Agriculture and rural
America are undergoing rapid change, as is the Farm Credit System. It
is such changes, along with administrative challenges, such as
recruiting and maintaining a well-trained and motivated workforce, that
the Farm Credit Administration is striving to keep up with. We
appreciate the committee's past assistance and we ask for your
continued help in the future.
It is our intent to stay within the constraints of our fiscal year
2007 budget as presented and we continue our efforts to be good
stewards of the resources entrusted to us in order to meet our
responsibilities. The Agency has worked hard to hold down the
assessment to the System for our operations, and I believe we have
achieved that objective over the past several years. Incidentally, the
cost of FCA's operations to System borrowers is approximately 2.6 basis
points, or about 2.6 cents for every $100 of assets, the lowest
relative cost to the FCS in decades. The FCS is financially healthy and
is poised to serve agriculture and rural America for years to come.
While we are proud of our record and accomplishments, I assure you
that the Agency will continue its commitment to excellence,
effectiveness, and cost efficiency and remain focused on our mission of
ensuring a safe, sound and dependable source of credit for agriculture
and rural America.
On behalf of my colleagues on the FCA Board and the Agency, this
concludes my statement and I thank you for the opportunity to share
this information.
______
Prepared Statement of Roger J. Klurfeld, National Appeals Division
INTRODUCTION
The National Appeals Division (NAD) was established by the
Secretary of Agriculture pursuant to the Reorganization Act of 1994.
The act consolidated the appellate functions and staffs of several USDA
agencies under a single administrative appeals organization. NAD
appeals involve program decisions of the Commodity Credit Corporation,
the Farm Service Agency, the Risk Management Agency, the Natural
Resources Conservation Service, and Rural Development agencies. In
States within the jurisdiction of the United States Court of Appeals
for the Eighth Circuit, NAD Hearing Officers adjudicate and the
Director makes final determinations on applications for fees under the
Equal Access to Justice Act (EAJA). NAD is headquartered in Alexandria,
Virginia, and has regional offices located in Indianapolis, Indiana;
Memphis, Tennessee; and Lakewood, Colorado. NAD's staff of 108 includes
64 Hearing and Appeals Officers.
MISSION
NAD's mission is to conduct evidentiary administrative appeals
hearings and reviews arising out of program decisions of certain USDA
agencies. Our strategic goal is to conduct independent evidentiary
hearings and issue timely and well-reasoned determinations that
correctly apply USDA laws and regulations. NAD's mission is statutorily
specific, but its operation is dynamic and challenging, given the
complexities of changing laws, regulations and policies affecting USDA
program decisions.
NAD's budget request for fiscal year 2007 is $14.8 million, which
is $416 thousand above the fiscal year 2006 appropriation. The increase
is for increases in pay costs.
That concludes my statement, and I look forward to working with the
Committee on the 2007 National Appeals Division budget.
______
Prepared Statement of R. Ronald Bosecker, Administrator, National
Agricultural Statistics Service
Mr. Chairman and members of the Committee, I appreciate the
opportunity to submit a statement for this Committee's consideration in
support of the fiscal year 2007 budget request for the National
Agricultural Statistics Service (NASS). This agency administers the
U.S. agricultural statistics program, which began in USDA in 1863.
Since 1997, NASS has conducted the U.S. Census of Agriculture, first
collected by the Department of Commerce in 1840. Both programs are
aligned with the basic mission of NASS to provide timely, accurate, and
useful statistics in service to U.S. agriculture.
FISCAL YEAR 2007 BUDGET
The agency's fiscal year 2007 budget request is $152.6 million.
This is a net increase of $13.3 million from the fiscal year 2006
adjusted appropriations. The fiscal year 2007 request includes
programmatic increases to continue the restoration and modernization of
the NASS core survey and estimation program ($3.9 million), and to fund
cyclical activities associated with preparing and conducting the Census
of Agriculture ($7.3 million).
AGRICULTURAL ESTIMATES
NASS statistical reports are critically important to assess the
current supply and demand in agricultural commodities. They are also
extremely valuable to producers, agribusinesses, farm organizations,
commodity groups, economists, public officials, and others who use the
data for decision-making. The statistics disseminated by NASS support
fairness in markets where buyers and sellers have access to the same
official statistics at the same pre-announced time. This prevents
markets from being unduly influenced by ``inside'' information, which
might unfairly affect market prices for the gain of an individual
market participant. The efficiency of commodity markets is enhanced by
the free flow of information, which minimizes price fluctuations for
U.S. producers. Statistical measures relating to the competitiveness of
our Nation's agricultural industry have become increasingly important
as producers rely more on world markets for their sales.
In fiscal year 2007, NASS is requesting an increase of $3.9 million
and 6 staff years to fund the continuation of the restoration and
modernization of the NASS core survey and estimation program. This
increase is directed to continuing the modernization of the core survey
and estimation program for NASS to meet the needs of data users at
professionally acceptable levels of precision for State, regional, and
National estimates. Decisions affecting billions of dollars in the U.S.
food and agricultural sectors are facilitated in both public and
private venues through access to reliable statistical information. The
USDA-NASS statistical program serves most agricultural commodity data
needs in the United States, as well as supplies important economic,
environmental, and demographic data that are used for policy that will
impact the livelihood and quality of life of rural residents. Funding
received in the fiscal year 2004 through fiscal year 2006
appropriations have been used to successfully improve the precision
level from commodity surveys conducted by NASS for State, regional, and
National estimates through sample size increases and better survey
response. Funding requested in fiscal year 2007 promotes data quality
by encouraging voluntary response through increased respondent
awareness of market and policy reliance upon USDA-NASS statistical
measures and by improving the data collection capabilities by local
interviewers throughout the Nation.
CENSUS OF AGRICULTURE
NASS is currently preparing for the 2007 Census of Agriculture
scheduled to be mailed to the Nation's farmers and ranchers in December
2007. The Census of Agriculture is taken every 5 years and provides
comprehensive data at the national, State, and county level on the
agricultural sector. The Census of Agriculture is the only source for
this information on a local level, which is extremely important to the
agricultural community. Detailed information at the county level helps
agricultural organizations, suppliers, handlers, processors, and
wholesalers and retailers better plan their operations. Demographic
information supplied by the Census of Agriculture also provides a very
valuable database for developing public policy for rural areas. The
2007 Census of Agriculture is the first time respondents have the
option of reporting electronically through the Internet. It also
includes improved coverage of American Indians and expanded data on
organic agriculture. Many additional improvements are being implemented
to enhance the data from this comprehensive data source. Census of
Agriculture programs are also conducted in Puerto Rico, Guam, and the
Commonwealth of the Northern Mariana Islands as part of the census
cycle. Results from all of the censuses are made available on the NASS
website.
NASS is requesting a cyclical increase of $7.3 million and 10
staff-years for the Census of Agriculture. The total Census of
Agriculture budget request is $36.6 million. The available funding
includes monies to continue preparations for the 2007 Census of
Agriculture. The increase will be used to collect data to measure
coverage of the census mail list, prepare census mail packages, and
prepare for data collection activities in fiscal year 2008. This
increase is comparable to a $10.0 million increase required during the
same period in the 2002 Census cycle.
major activities of the national agricultural statistics service (nass)
The ongoing expansion of global markets for U.S. goods and services
continues to increase the need for modern and reliable statistical
information. The periodic surveys and censuses conducted by NASS
contribute significantly to economic decisions made by policymakers,
agricultural producers, lenders, transporters, processors, wholesalers,
retailers and, ultimately, consumers. Lack of relevant, timely, and
accurate data contributes to wasteful inefficiencies throughout the
entire production and marketing system.
The need for timely, accurate, and useful statistics on U.S.
agriculture has been highlighted in recent years due to several natural
disasters. The catastrophic hurricanes which moved through Florida
during the end of 2004 heavily impacted the citrus industry. The degree
of this impact was measured by NASS through a special November forecast
of citrus production. Normal processes do not include a November
forecast. The special forecast allowed for a timely unbiased assessment
of the damage resulting from the hurricanes. Likewise, the discovery of
Asian Soybean rust in the United States resulted in heightened
speculation of how growers would react to the fast-spreading, yield-
reducing disease. Data collected by NASS allowed for an early
assessment of farmer awareness of soybean rust and how its discovery
would affect planting decisions for the 2005 crop. Results were
published in the 2005 Prospective Plantings report.
NASS works cooperatively with each State Department of Agriculture
throughout the year to provide commodity, environmental, economic, and
demographic statistics for agriculture. This cooperative program, which
began in 1917, has served the agricultural industry well and is
recognized as an excellent model of successful State-Federal
cooperation. Working together helps meet both State and national data
needs while minimizing overall costs by consolidating staff and
resources, eliminating duplication of effort, and reducing the
reporting burden on the Nation's farm and ranch operators. The forty-
six field offices in NASS, covering all fifty States and Puerto Rico,
provide statistical information that serves national, State, and local
data needs.
NASS has been a leader among Federal agencies in providing
electronic access to information. All reports issued by NASS's
Agricultural Statistics Board are made available to the public at a
previously announced release time to ensure that everyone is given
equal access to the information. All national statistical reports and
data products, including graphics, are available on the Internet, as
well as in printed form, at the time they are released. Customers are
able to electronically subscribe to NASS reports and can download any
of these reports in a format easily accessible by standard software. A
summary of NASS and other USDA statistical data are produced annually
in USDA's Agricultural Statistics, available on the Internet through
the NASS home page, on CD-ROM disc, or in hard copy. All forty-six NASS
field offices have home pages on the Internet, which provide access to
special statistical reports and information on current local commodity
conditions and production.
NASS's Statistical research program is conducted to improve methods
and techniques used for collecting, processing, and disseminating
agricultural data. This research is directed toward achieving higher
quality census and survey data with less burden on respondents,
producing more accurate and timely statistics for data users, and
increasing the efficiency of the entire process. For example, NASS has
developed and released a new interactive mapping tool on the Internet.
Data users can now customize maps using various data items from the
Census of Agriculture. The growing diversity and specialization of the
Nation's farm operations have greatly complicated procedures for
producing accurate agricultural statistics. Developing new sampling and
survey methodology, expanding modes of data collection, including
electronic data reporting, and exploiting computer intensive processing
technology enables NASS to keep pace with an increasingly complex
agricultural industry.
The primary activity of NASS is to provide reliable data for
decision-making based on unbiased surveys each year, and the Census of
Agriculture every 5 years, to meet the current data needs of the
agricultural industry. Farmers, ranchers, and agribusinesses
voluntarily respond to a series of nationwide surveys about crops,
livestock, prices, chemical use and other agricultural activities each
year. Periodic surveys are conducted during the growing season to
measure the impact of weather, pests, and other factors on crop
production. Many crop surveys are supplemented by actual field
observations in which various plant counts and measurements are made.
Administrative data from other State and USDA agencies, as well as
data on imports and exports, are thoroughly analyzed and utilized as
appropriate. NASS prepares estimates for over 120 crops and 45
livestock items which are published annually in more than 400 separate
reports.
Approximately 60 percent of the NASS staff are located in the 46
field offices; 21 of these offices are collocated with State
Departments of Agriculture or land-grant universities. NASS field
offices issue approximately 9,000 different reports each year and
maintain Internet pages to electronically provide their State
information to the public.
NASS has developed a broad environmental statistics program under
the Department's water quality and food safety programs. Until 1991,
there was a serious void in the availability of reliable pesticide
usage data. Therefore, beginning in 1991 NASS cooperated with other
USDA agencies, the Environmental Protection Agency (EPA), and the Food
and Drug Administration, to implement comprehensive chemical usage
surveys that collect data on certain crops in specified States. NASS
data allows EPA to use actual chemical data from scientific surveys,
rather than worst case scenarios, in the quantitative usage analysis
for a chemical product's risk assessment. Beginning in fiscal year
1997, NASS also instituted survey programs to acquire more information
on the post-harvest application of pesticides and other chemicals
applied to commodities after leaving the farm. These programs have
resulted in significant new chemical use data to help fill the void of
reliable pesticide usage data. Surveys conducted in cooperation with
the Economic Research Service (ERS) collect detailed economic and
farming practice information to analyze the productivity and the
profitability of different levels of chemical use. American farms and
ranches manage nearly half the land mass in the United States,
underscoring the value of complete and accurate statistics on chemical
use and farming practices to effectively address public concerns about
the environmental effects of agricultural production.
NASS conducts a number of special surveys, as well as provides
consulting services for many USDA agencies, other Federal or State
agencies, universities, and agricultural organizations on a cost-
reimbursable basis. Consulting services include assistance with survey
methodology, questionnaire and sample design, information resource
management, and statistical analysis. NASS has been very active in
assisting USDA agencies in programs that monitor nutrition, food
safety, environmental quality, and customer satisfaction. In
cooperation with State Departments of Agriculture, land-grant
universities, and industry groups, NASS conducted 151 special surveys
in fiscal year 2005 covering a wide range of issues such as farm
injury, nursery and horticulture, farm finance, fruits and nuts,
vegetables, and cropping practices. All results from these reimbursable
efforts are made publicly available.
NASS provides technical assistance and training to improve
agricultural survey programs in other countries in cooperation with
other government agencies on a cost-reimbursable basis. The NASS
international program focuses on the developing and emerging market
countries in Asia, Africa, Central and South America, and Eastern
Europe. Accurate foreign country information is essential for the
orderly marketing of U.S. farm products throughout the world. NASS
works directly with countries by assisting in the application of modern
statistical methodology, including sample survey techniques. This past
year, NASS provided assistance to Armenia, Belize, Brazil, China, El
Salvador, Georgia, Guatemala, Honduras, Mexico, Nicaragua, Panama,
Russia, Sudan, and the Ukraine. In addition, NASS conducted training
programs in the United States for 220 visitors representing 30
countries. These assistance and training activities promote better
United States access to quality data from other countries.
NASS annually seeks input on improvements and priorities from the
public through the Secretary of Agriculture's Advisory Committee on
Agriculture Statistics, interaction with producers at major commodity
meetings, data user meetings with representatives from agribusinesses
and commodity groups, special briefings for agricultural leaders during
the release of major reports, and through numerous individual contacts.
As a result of these activities, the agency has made adjustments to its
agricultural statistics program, published reports, and expanded
electronic access capabilities to better meet the statistical needs of
customers and stakeholders.
This concludes my statement, Mr. Chairman. Thank you for the
opportunity to submit the statement for the record.
______
Prepared Statement of Charles Christopherson, Chief Financial Officer,
Office of the Financial Officer
Mr. Chairman and members of the Subcommittee, I am pleased to
present the fiscal year 2007 budget request for the United States
Department of Agriculture (USDA), Office of the Chief Financial Officer
(OCFO) and the Department's Working Capital Fund (WCF).
My remarks today address:
--Results we have achieved recently;
--Results on which we are currently focused;--Our fiscal year 2007
budget request; and
--The Department of Agriculture's Working Capital Fund.
The Office of the Chief Financial Officer is responsible for the
financial leadership of an enterprise, which if it were in the private
sector would be one of the largest companies in the United States with
almost $95 billion in annual spending, almost 110,000 full time
equivalents (Staff Years) and over $132 billion in assets.
These responsibilities are fulfilled by a headquarters staff in
Washington, DC, with accounting operations support provided by USDA's
Controller Operations Division in New Orleans, Louisiana.
The National Finance Center (NFC), also located in New Orleans,
provides payroll processing and related services for approximately 31
percent of the Federal civilian workforce in more than 130 government
entities. In fiscal year 2005, the NFC processed $32 billion in payroll
for more than 565,000 Federal employees. NFC also services the Office
of Personnel Management performing health benefit reconciliations and
health care premium processing on a Government-wide level.
RESULTS ACHIEVED RECENTLY
In fiscal year 2005, OCFO continued to make substantial progress in
improving financial management, financial information, and financial/
corporate systems throughout USDA. OCFO also actively worked on
government-wide financial management issues affecting USDA to ensure we
could achieve substantive and sustainable results. Some of the
significant results USDA achieved in financial management, financial
systems and related areas in fiscal year 2005 include:
--Attained another clean financial audit opinion. Our ability to
sustain this critical performance benchmark is powerful
evidence of the Department's improved accountability, internal
control and data integrity.
--This year Hurricane Katrina had a major impact on the NFC and OCFO
functions located in the New Orleans area. Thanks to the well-
practiced continuity of operations plan (COOP), NFC and the
other OCFO operations in New Orleans were able to recover
operations quickly and to meet commitments to their customers
without interruption. Critical information technology services
were recovered within 24 hours; other essential operations were
recovered as planned over the next 10 days. We are most proud
that NFC was able to pay 565,000 employees accurately and on
time from their alternate locations. More noteworthy, NFC
converted two new customers, Transportation Safety
Administration and U.S. Coast Guard to its payroll system
during the 2 weeks following the storm and paid these new
payroll employees on time. The swiftness and accomplishment of
the recovery is a tribute to the employees of the NFC and OCFO
who deployed to remote locations, some leaving their families
behind, worked extended hours and assumed non-traditional jobs
to get the job done.
--The NFC and OCFO are now reconstituting operations back to the New
Orleans location. Due to the personal impact on the employees'
homes and the New Orleans infrastructure, the reconstituting is
proving to be as difficult as the deployment. More than 96
percent of the 1,250 employees of the NFC and OCFO have
returned to New Orleans with some 400 of the employees located
in trailers in a trailer park or at their homes. The overall
productivity of the New Orleans-based operations have been
impacted by the loss of a large number of experienced employees
due to separations and retirements (13-percent of the workforce
has retired or separated after Katrina to work on their homes
or relocate from the area). OCFO operations have also been
impacted by (1) the Postal Service releasing mail from three
different Katrina storage facilities which contain potentially
thousands of undelivered invoices each; (the first warehouse
was released in February 2006) and (2) the loss of
knowledgeable employees from earlier reductions in force. The
payroll and human resources serviced by the NFC has been
impacted by a doubling in the volume of retirements and
separation transactions of its customer base and the loss of
knowledge through staff adjustments in repeated reduction-in-
force actions in 2005. Although they have difficult personal
lives, the New Orleans staff is determined to eliminate the
workload backlog through extensive overtime. OCFO in Washington
D.C. continues to assist the operation and believes that the
backlog will be cured in the coming months.
--Met OMB interim and year-end accelerated deadlines for preparing
the financial statements. Year-end statements were provided 45
days after the close of the fiscal year, that is, by November
15. USDA met these ambitious dates while sustaining data
quality and provided USDA executives and program managers with
financial results information more timely than ever before;
--Reduced existing material internal control weaknesses from 32, 4
years ago, to 2 existing deficiencies at the end of fiscal year
2004. Although one new material weakness was reported in the
fiscal year 2005 Performance and Accountability Report, for a
total of three remaining for fiscal year 2006, we continue to
aggressively work to resolve the underlying internal control
and system issues. We will continue to work diligently to
eliminating material weaknesses;
--Improved quality assurance of financial data by continuing to focus
on fixing ``root causes'' of data flow and accuracy problems.
Regularly monitored a set of metrics to ensure data is timely
and accurate and useful to USDA managers;
--Closed 102 of 164 audits in fiscal year 2005 as compared to 96 in
fiscal year 2004, a 6 percent increase in audit closures;--
Successfully consolidated and standardized departmental travel
procedures and policies;
--Continued to monitor for travel card misuse, these efforts resulted
in lowering the Department-wide individually billed accounts
delinquency average of 4.68 percent in fiscal year 2004, to
4.06 percent in fiscal year 2005, representing a 13 percent
improvement;
--During fiscal year 2005, the Forest Service submitted a competitive
sourcing plan to OMB for approval. In addition, USDA completed
2 competitive sourcing studies with results estimated to avoid
costs of $8.1 million over a 5-year period with annualized
amounts of over $1.62 million.
--Implemented the real-time interface between the financial system
and procurement system, integrating the financial and
procurement systems for the first time and enhancing internal
funds control and streamlining operations; and
--Enhanced through a technology modernization the data warehouse
reporting to provide more timely and useable financial and
performance information to USDA executives and managers to
manage daily operations.
In addition to the above, during fiscal year 2005, USDA collected
$1.1 billion of delinquent debt, $862 million through agencies using
our internal tools and $238 million through the Department of Treasury
Administrative Offset Program and other Debt Collection Improvement Act
(DCIA) techniques. Since 1996, annual collections of delinquent USDA
debt using DCIA tools have increased more than 276.6 percent from $63.2
million in fiscal year 1996 to $238 million in fiscal year 2005. As of
September 30, 2005, USDA had referred to the Treasury Offset Program 96
percent of the $1.2 billion of eligible receivables and 97 percent of
loans eligible for cross servicing compared to only 14 percent in 2001.
Results on which we are Currently Focused
We continue to be focused on delivering valuable results in fiscal
year 2006 as a context for consideration of our fiscal year 2007 budget
request. Three areas of focus are: internal control and management
information; support and develop shared services to the Departments of
the Federal Government; and the President's Management Agenda.
In the area of internal control and management information, we are
committed to:
--Continuing to enhance USDA's system of internal controls and data
integrity as reflected in sustaining in fiscal year 2006 USDA's
unqualified ``clean'' opinions on the consolidated financial
statements and component agency financial statements;
--Meeting OMB's interim and year-end deadlines for financial
statement and the Performance and Accountability Report;
--Eliminating material weaknesses in internal controls and systems
non-conformances with the requirements of the Federal Financial
Management Improvement Act (FFMIA);
--Implementing an online USDA corporate financial and performance
reporting, system that the Secretary of Agriculture and his
senior executives will use to drive program results;
--Continuing to develop financial management and accounting
operations leadership talent in-depth throughout all our
agencies so as to enhance further USDA's culture of sound
financial management and to sustain management results already
achieved; and
--Expanding the use of data warehousing technology to improve data
integrity and timely availability of financial and performance
information to USDA's executives and managers for the
management of their daily operations.
To support and develop shared services to the Departments of the
Federal Government, we are focused on:
--Completing the reconstitution and rebuilding the OCFO operations
and the NFC operations in New Orleans to support the functions
of the Federal Government and the USDA;
--Structuring a Human Resources Line of Business (HR LoB) venture for
the NFC while continuing to implement new customers into
ePayroll. The HR LoB will provide a new business growth
opportunity for NFC in providing human resources systems and
services to all civilian Federal agencies;
--Completing the transfer of the accounting and paralegal functions
of the Thrift Savings Plan to the Federal Retirement Thrift
Investment Plan;
--Securing a location for the alternate worksite and computing
center, which reduces the operational risk through continuous
improvement of and practice in recovery operations for NFC and
accounting operations;
--Working with Office of Personnel Management (OPM) on retaining
employees in critical positions with long-term learning curves
and cycles at the NFC; and
--Reviewing additional USDA sponsored financial services that can
create savings in the Federal Government through a consolidated
service center. These services include a Financial Management
Line of Business.
For President's Management Agenda (PMA) initiatives, we are:
--Implementing the eTravel initiative throughout USDA to consolidate
travel processes at the Department level and centrally manage
them through a customer-centric, self-service, web-based
environment providing end-to-end travel services;
--Adding the personal property components to the Corporate Property
Automated Information System (CPAIS). CPAIS was implemented in
fiscal year 2004 and currently tracks all USDA real property
whether owned or leased. Incorporating personal property into
CPAIS will allow USDA, in one place, to have a full view and
accounting of our property assets;
--Taking aggressive action to implement the Improper Payments
Information Act (IPIA), Public Law 107-300 by establishing
measurements for programs that meet the required payment
criteria. We strengthened guidance to agencies requiring
detailed plans with key milestones and quality deliverables. We
are monitoring accomplishments through monthly workgroup
meetings, assessment of deliverables, evaluation of risk
assessments, and agency scorecards for executives and managers;
--Conducting Independent Verification and Validation (IV&V) review
activities for the following: Feasibility studies conducted and
submitted by USDA Agencies and Offices in support of the USDA
Competitive Sourcing Green Plan; post-competition assessments
for completed performance reviews along with the cost
comparison; and independent validation verification of prior
year achieved savings;
--Collaborating with Departmental Administration to use competitive
sourcing, where appropriate, to address core competency and
skills gaps;
--Sponsoring training sessions for USDA Agencies and Offices on
various A-76 related topics including: FAIR Act Inventory;
Feasibility Studies; Performance Work Statements; and Most
Efficient Organizations; and
--Facilitating departmental-wide collaboration efforts and working
group sessions to develop standards for FAIR Act Inventory
coding process: FAIR Act Inventory function code definitions
are being standardized and Reason Code Justifications and
Analyses are being evaluated to ensure compliance with OMB
regulations.
Fiscal Year 2007 Budget Request
I would like to thank the Committee for your confidence in
entrusting us with the basic resources required to provide stewardship
over USDA financial processes. USDA's excellent results in sustaining
and enhancing financial accountability in fiscal year 2005 were only
possible because of your support. I would now like to focus on our
fiscal year 2007 operating budget request, which is for $19,931,000, an
increase of $14,116,000 or 242.8 percent more than the fiscal year 2006
budget of $5,815,000. Approximately 90 percent of the Office of the
Chief Financial Officer's current obligations are for the salaries and
benefits of the OCFO employees. As part of this increase request, of
$176,000 is to fund pay costs. The pay-related increases requested are
necessary for us to accomplish key outcomes and to successfully meet
our goals for fiscal year 2007. The remaining $13,940,000 of the
request is for procurement of hardware and software to improve the
financial management performance through implementation of a new core
financial management system. OCFO is pursuing significant modernization
of its technically outdated corporate financial, administrative
payments and program general ledger systems. These outdated systems are
no longer supported by the vendor and pose an unacceptable risk for
USDA. Due to the current transaction services offered to other Federal
Government entities, USDA has discussed with OMB the opportunity to
offer a full financial solution to smaller agencies in the Federal
Government.
USDA Working Capital Fund
The Working Capital Fund (WCF) serves as the Department's principal
investment engine to achieve progress in developing and implementing
new corporate systems. Last year, we again made use of authority
granted to us by the Committee in the appropriations language to use
unobligated balances as part of this developmental effort. In 2005, our
plan for use of these resources was reviewed by Congress--as required
under appropriations language--and executed to continue our progress in
implementing an enterprise human resources information system, an
integrated acquisition system, and a management information tracking
tool. For 2006, we have prepared a plan to Congress to obligate funds
in pursuit of further efforts in development of an integrated
procurement system and an enterprise human resources system. That plan
will be delivered to the Committees on Appropriations shortly. We are
grateful for the support and look forward to working with the Committee
as our efforts to improve corporate systems proceed.
In addition to the investments in corporate systems, the WCF
supports services in the areas of financial management, information
technology, communications, administration, as well as record keeping
and item processing. It is our objective to use this financing
mechanism to provide to agencies of the Department, the most effective
cost-efficient centrally managed services available.
The President's fiscal year 2007 budget estimates that total
operating costs for the WCF in fiscal year 2007 will be $515.1
million--net of intrafund transfers between WCF activities--a $13.0
million increase, or 2.6 percent over the fiscal year 2006 estimate.
Costs to USDA agencies will increase more slowly, about 2.4 percent
from fiscal year 2006 to fiscal year 2007.
The increases in cost estimates reflect the fact that the WCF
recovers costs on the basis of user demand for services with the
objective of lowering total costs through centrally-managed services.
Historically, the largest of the USDA-wide services has been the
National Finance Center. However, its menu of services has been
changing to reflect the changing needs of customers both inside and
outside USDA. Information Technology Services will be the largest WCF
activity in terms of cost in fiscal year 2006. Examples of other
services supported by the WCF include mainframe computing and
information technology services at the National Information Technology
Center in the Office of the Chief Information Officer, and video and
teleconferencing production services provided by the Broadcast and
Media Technology Center in the Office of Communications. Departmental
Administration provides a wide variety of personal property, mail, and
duplicating services to USDA and non-USDA customers. Among the
corporate systems activities supported by the WCF include: Corporate
Financial Management Systems and Integrated Procurement Systems. The
source of funds for these investments in systems includes direct
billings, purchase card rebates, and the use of unobligated balances.
I would like to point out that the WCF financing mechanism, as a
reimbursement for goods and services provided, gives us an opportunity
to refine our estimates as newer and better information becomes
available regarding customer demand and costs. Our office is currently
engaged in reviewing fiscal year 2007 estimates with the goal of
reducing estimates wherever possible in costs for core services to USDA
agencies. It was with this objective in mind that we were able to
submit an operating estimate for fiscal year 2007 that is consistent
with expected inflation. I think it is important to note that costs for
core services--those corporate services in which all agencies share--
will see cost increases of only 1.2 percent from fiscal year 2006 to
fiscal year 2007. As we begin development of the fiscal year 2008
budget this spring, we will be reexamining fiscal year 2007 estimates
for more economies and savings. As we did last year, we will establish
spending targets for WCF activities that take into account the
Department's spending priorities among its agencies reflected in the
President's budget.
I would also like to express my appreciation to the Committee for
all of the assistance and support provided to the Department in the
wake of Hurricane Katrina. Specifically, the resources provided to us
to address disaster recovery and resumption of business operations were
essential to our success in bringing the National Finance Center and
other activities in New Orleans back on line. The story of our recovery
in New Orleans is primarily a story of people--dedicated workers who
through their long hours of effort ensured that operations were resumed
as quickly as possible. That we have been able to resume payrolling and
financial operations activity to the extent we have is a reflection on
their efforts and the support we have received from the Congress.
Thank you, Mr. Chairman, for the opportunity to share the results
we have achieved and our fiscal year 2007 budget request with the
Committee. We especially look forward to working together with you and
the Committee in fulfilling the vision for financial management we all
have for the United States Department of Agriculture.
______
Prepared Statement of Terri Teuber Moore, Director of Communications,
Office of Communications
Mr. Chairman and members of the Subcommittee, I am pleased to
discuss the fiscal year 2007 budget request for the Department of
Agriculture's Office of Communications (OC).
When Congress wrote the law establishing the U.S. Department of
Agriculture in 1862, it said the department's `` . . . general designs
and duties shall be to acquire and to diffuse among the people of the
United States useful information on subjects connected with agriculture
in the most general and comprehensive sense of the word.'' OC
coordinates the implementation of that original mandate.
OC coordinates communications with the public about USDA's
programs, functions, and initiatives, providing vital information to
the customers and constituency groups who depend on the Department's
services for their well-being. For example, OC is coordinating the
Department's communications efforts relating to the threat of avian
influenza and is prepared to activate a Joint Information Center (JIC),
which would support the Department in meeting its obligations in the
event of an avian influenza outbreak. In addition, OC also coordinates
the communications activities of USDA's seven major mission areas and
provides leadership for communications within the Department to USDA's
employees.
OC is adopting new technologies to meet the increased demands for
the dissemination of accurate information in a timely manner. Using the
internet, radio, television and teleconference facilities, we are able
to ensure that the millions of Americans whose lives are affected by
USDA's programs receive the latest and most complete information. As
the continuing concern over avian influenza demonstrates, these
technologies are a critical resource used by the Secretary and the
agencies to provide timely information, which helps to maintain
consumer confidence and stabilize agricultural markets.
OC's 5-year strategic goal is to support the Department in creating
full awareness among the American public about USDA's major initiatives
and services. This is essential to providing effective customer
services and efficient program delivery. As a result, we expect more
citizens, especially those in underserved communities and geographic
areas, to access helpful USDA services and information.
A central element of this support is OC's active participation in
the Department's eGovernment initiative. OC plays a key role in
ensuring that the Department's eGovernment implementation results in
the public's improved access to more current, accurate, relevant, and
organized USDA products, services, and information. The USDA.gov
portal, managed by OC, is customer- or citizen-centric, allowing OC to
target information by audience preference, subject and personalization.
On average, the USDA.gov portal reaches 1.5 million citizens weekly.
The demand by citizens and other constituencies for information, via
the USDA.gov portal, web casting, electronic mail distribution,
teleconferences, and publications, is expected to continue to increase.
OC will continue to take an active part in policy and program
management discussions by coordinating the public communication of USDA
initiatives. We will continue to provide centralized operations for the
production, review, and distribution of USDA information to its
customers and the general public. Also, we will monitor and evaluate
the results of these communications. Our staff is instructed to use the
most effective and efficient communications technology, methods, and
standards in carrying out communications plans.
Also, we are focusing on improved communications with USDA
employees, especially those away from headquarters. This will enhance
their understanding of USDA's general goals and policy priorities,
programs and services, and cross-cutting initiatives.
Our office will continue to work hard to meet our performance goals
and objectives. We will work to communicate updated USDA regulations
and guidelines, conduct regular training sessions for USDA
communications staff about using communication technologies and
processes to enhance public service, foster accountability for
communications management performance throughout USDA, and continue to
work to create a more efficient, effective and centralized OC.
Increasing availability of USDA information and products to underserved
communities and geographic areas through USDA's outreach efforts is
integral to our performance efforts. OC will also provide equal
opportunity for employment and promote an atmosphere that values
individuals.
FISCAL YEAR 2007 BUDGET REQUEST
OC is requesting a budget of $9.7 million. This is a net increase
of $0.28 million for the annualization of the fiscal year 2006 pay
increase and the anticipated fiscal year 2007 pay increase.
As more than 88 percent of OC's obligations are for salaries and
benefits, the requested increase is vital to support and maintain
staffing levels for current and projected demands for our products and
services. While OC has realized some cost savings by replacing high
grade employees who have retired with lower grade employees, our
current budget leaves little flexibility for absorbing increased costs.
In fact, OC would not be able to absorb the increased salary costs in
fiscal year 2007 without placing considerable constraints on daily
operations or impacting staff size and therefore the timely delivery of
information to the public.
Our central task is to ensure the development of communications
strategies, which are vital to the overall formation, awareness and
acceptance of USDA programs and policies. The World Wide Web is firmly
established as an effective means by which the Department can provide
information and receive comments on the whole range of agricultural
programs, functions and issues of interest to the public here or around
the world.
OC will continue to strive to make the most effective use of this
medium. OC has led the adoption of content management software which
speeds the addition of new material, improves our quality control
measures to ensure the accuracy of the information available through
the USDA.gov portal, and reduces the staff time required for overall
maintenance of the site.
This improved control greatly reduces the time necessary to post
important information to the media and the public while providing a
greater ability to ensure the accuracy of the information. This allows
OC to use a large document and web repository, sharing resources and
information with mission areas and agencies as well as the public.
OC looks forward to continuing our commitment to the American
public by providing timely, accurate information about our programs and
services.
This concludes my statement, Mr. Chairman. I will be pleased to
respond to any questions.
______
Prepared Statement of David M. Combs, Chief Information Officer, Office
of the Chief Information Center
INTRODUCTION
Mr. Chairman and members of the Subcommittee, thank you for the
opportunity to share with you our progress on using information
technology (IT) to improve service delivery to the customers of the
Department of Agriculture (USDA), while at the same time implementing
Enterprise Architecture (EA) principles and eGovernment with IT.
The Office of the Chief Information Officer (OCIO) is changing how
USDA invests in and uses IT. Instead of single agency-centric systems,
we are investing in common government-wide and Department-wide IT
solutions. OCIO is leading USDA participation in 21 of the 25
government-wide Presidential Electronic Government (eGovernment)
initiatives. At the same time, under the framework of the Department's
Enterprise Architecture, we are managing USDA IT investments to promote
collaboration across common lines-of-business, reduce duplication with
our internal ``Smart Choices,'' and finding savings by leveraging the
USDA's size/economies-of-scale in Department-wide IT acquisitions.
The President's fiscal year 2007 budget request for OCIO totals
about $16.9 million. We are requesting an increase of approximately
$639,000 to cover pay costs.
USDA'S FISCAL YEAR 2007 INFORMATION TECHNOLOGY BUDGET SUMMARY
During the fiscal year 2007 USDA budget preparation process, OCIO
staff scrutinized agency IT investment plans to ensure alignment with
USDA program delivery plans as well as the USDA Enterprise
Architecture. In fiscal year 2007, the Department is requesting about
$2.1 billion for IT. Components of the IT budget include:
--37 percent of fiscal year 2007 IT spending--estimated at $783
million, is transferred to the States for the development and
maintenance of automated systems to support Food Stamps, WIC,
and related programs
--The following is a breakdown of the remaining $1.4 billion in IT
discretionary funding:
--35 percent--estimated at $483 million--will be used for advisory
services (e.g. consultants)
--27 percent--estimated at $372 million--will be used for Federal IT
personnel costs
--18 percent--estimated at $242 million--will be used for equipment
--12 percent--estimated at $167 million--will be used for advisory
services (e.g. telecommunications)
--8 percent--estimated at $95 million--will be used for software.
Overall, the IT related proposals in the USDA request represent
about 3 percent of the total $64 billion proposed for IT investments
for the Federal Government in fiscal year 2007.
SERVICE CENTER MODERNIZATION INITIATIVE--(SCMI)
Mr. Chairman, the modernization of our Service Center Agencies'
(SCA) technology infrastructure continues to be one of USDA's highest
IT priorities. The Common Computing Environment (CCE) initiative is
managed by OCIO working in collaboration with the SCA. CCE supports
over 45,000 SCA employees, volunteers and partners in the delivery of
over $55 billion in programs through our field office delivery system.
The new infrastructure is flexible and built around maximizing
information sharing both within USDA and with other Federal, State and
Local agencies, the private sector, and USDA customers.
I would like to take a few minutes to update you on the status of
the CCE technology, as well as our progress in merging the three SCA IT
support staffs into a single organization under OCIO.
The OCIO selected Information Technology Services (ITS) as the name
of the converged organization, which came into being on November 28,
2004. There were 785 full time equivalents transferred to the new ITS
organization--264 were transferred from the Farm Service Agency, 351
from the Natural Resources Conservation Service, 164 from the Rural
Development mission area, and 6 from other OCIO organizational
elements. A total of 684 personnel were transferred out from the SCA.
ITS was established under the Department's Working Capital Fund to
process revenue and obligations for ITS. The CCE appropriated dollars
are to be utilized for capital expenditures, while the WCF will be used
to pay ITS operating expenses for the CCE. Notifications to OMB and
Congress were made to address the expansion of existing activities in
our Working Capital Fund.
The purpose of creating ITS was to have one unified organization
dedicated to supporting both the shared and the diverse IT requirements
of the SCA and their partner organizations. On the one hand, the
agencies were already sharing and investing in a common computing
environment (and its infrastructure, network systems, and associated
hardware, software, and training); on the other hand, each agency had
to manage its own distinct computing systems, software, and IT support
teams.
By converging both technology resources and skilled IT staff into
one organization, ITS can efficiently focus a broad range of technology
investment and diverse support, planning, and management services,
spread equitably back to the agencies and replacing what might be
considered triplicate efforts.
The fiscal year 2007 CCE budget request is for $108,900,000. A net
decrease of $1,172,000, comprising:
An increase of $5,212,000 for the CCE Basic Infrastructure, the
increase will restore CCE basic infrastructure funding to a level
needed to provide a stable level of service, while increasing Web Farm
capacity.
A net decrease of $4,504,500 in the Farm Service Agency (FSA)
Specific Funds. FSA is in the middle of a multi-year modernization
project to reengineer its legacy application systems. The goals of
modernization are twofold: (1) to eliminate FSA's dependency on a
proprietary and restrictive operating environment by developing
applications that are platform independent; and (2) to achieve a
customer-centric focus, providing ease of access and convenience to FSA
customers. As these applications are developed, they will be hosted on
the CCE infrastructure. In fiscal year 2007, FSA is requesting a
decrease of $4,504,500 in IT support to the $73,260,000 CCE fiscal year
2006 base for agency specific needs. This decrease has occurred due to
contract efficiencies realized with several of our support services
contracts for infrastructure support. In addition, this decrease has
occurred due to the completion of business modernization efforts in the
Farm Loan Program area.
An increase of $1,845,000 for the Natural Resources Conservation
Service (NRCS). This increase will pay for increased telecommunications
and related costs.
A decrease of $2,277,000 in the Rural Development mission area. Now
that ITS is operational, all the Web Farms are part of the ITS
organization. The RD agency specific funds supports activities
including the telecommunications support associated with Service Center
modernization activities and the continued development and operation of
the ITS Web Farms. RD has moved all of its major applications to the
Web. A common infrastructure integrates Web services for RD customers,
employees, and trading partners, making the Web a main stream for doing
RD business. The public will be able to access more information and
services online. The funds for this initiative will provide the
continued support, enhancement of the common infrastructure hosting all
applications for RD, regular software and hardware maintenance and the
daily costs for operations and security.
A net decrease of $347,000 in the OCIO Interagency e-Gov Funds.
More of the interagency e-Gov costs are becoming operational in nature
and less infrastructure related. Therefore, the amount of interagency
e-Gov costs borne by the SCMI is decreasing. The e-Gov operational
costs will be part of the service level agreements between the ITS and
the Service Center Agencies.
An offsetting decrease of $1,101,000 to reflect the permanent
reduction of the fiscal year 2006 rescission from budget authority in
fiscal year 2007.
Congressional support for the CCE initiative has been key to its
success. As we move forward with ITS, Congressional support will remain
critical.
INFORMATION SECURITY
Mr. Chairman, for many years USDA has been remiss in its
responsibility to meet all Federal information security requirements.
To address this situation, we have significantly improved the posture
of our security program. FISMA and OMB Circular A-130 require all
Federal agencies, including USDA, to certify and accredit (C&A) their
systems. This effort has improved our security plans, updated and
corrected our security documentation, tested our networks and
applications for security weaknesses, and successfully engaged our
business organizations in the discipline of security management.
USDA IT security staffs are now in the process of addressing
security issues that arose through our C&A activities. Action plans
have been establish to mitigate specific security weaknesses and
implement improved controls, and to meet the FISMA performance measures
designed by OMB. Within the OCIO, we have established a rigorous
process to track these corrective actions and ensure they are completed
in a timely and efficient manner.
As USDA's information security program matures, automated tools are
necessary to quickly and efficiently address cyber risks. We continue
to provide our agency security staffs with monitoring devices and
automated patching processes that assist in preventing disruption by
intrusion or the introduction of malicious programs. During fiscal year
2006, we will deploy an improved incident tracking systems help us
better manage and report detected breaches and we will continue to
maintain a rigorous security training and awareness program which
requires annual participation by all USDA and contract personnel.
Through good preventative planning, such as system C&A combined
with improving the Department's overall operational response to
security Challenges, we are reducing the risk associated with the
electronic use and delivery of USDA information and services.
ELECTRONIC GOVERNMENT
Mr. Chairman, we continue to move aggressively to implement
interagency and interdepartmental services to support common needs. The
primary goals of our approach are to reduce costs and improve the
quality of interactions with our customers.
USDA, along with our partners in the other Federal agencies, has
worked hard over the past 5 years to simplify citizens' access and
interaction with their government. The results of these efforts are
remarkable. Our efforts reduced the burden on citizens, partners, and
employees by simplifying access to the Department's information and
services and streamlining internal processes. For example:
USDA helped citizens determine their eligibility for USDA benefits
by incorporating pre-eligibility surveys onto a government-wide Web
site, www.govbenefits.gov. Citizens are able to save time at a
government office by completing the online survey in advance. They can
learn ahead of time if they do not have go to the office, thereby
saving unnecessary travel time. USDA provides access to 34 benefits
programs on GovBenefits.gov. For the 12-month period ending August
2005, the site generated over 140,000 referrals to USDA State and
Federal programs' Web sites for more information.
USDA simplified citizens' access to government recreational
facilities through its leadership in developing www.recreation.gov. The
government's online service provides a single point of access to
accurate information about Federal recreation destinations. Citizens
using www.recreation.gov can access information from the Forest
Service, such as cabin/campsite materials, maps, facts and figures, and
permit forms. Soon, advance reservations for Forest Service facilities
can be made online through the National Recreation Reservation Service.
USDA gives businesses easy, online access to resources that help
them understand how to meet the compliance requirements for regulations
affecting them. Currently, 13 USDA agencies are using www.business.gov
to provide businesses with access to over 500 guidance resources and
forms, plus compliance and regulatory information and relevant links.
We worked with our Federal partners at www.regulations.gov to make
it easier for the public to comment online about Federal regulations.
The www.regulations.gov currently allows citizens to search and provide
comments online on all regulations open for comment. USDA employees
benefit from streamlined and consistent internal processes to review
and process public comments. Currently, four USDA agencies have
successfully moved from paper-based processes to the Federal Docket
Management System (FDMS). USDA's other rule-making agencies are
preparing to move to the online service in the near future.
USDA is a major geospatial data producer and contributor to the
Federal Government's www.geodata.gov. The Geospatial One-Stop site
provides online access to geospatial data collected by the FSA, the
Natural Resources Conservation Service, and the Forest Service. This
online access enables the public and other Federal agencies to both
avoid costs and realize cost savings. Recently, USDA added a link to
the National Agricultural Imagery Program's vast library so that
researchers, businesses, and the general public can now directly order
data sets thus greatly improving the availability of this in-demand
data.
We streamlined the process of locating grant opportunities and
applying for grants by working with our Federal partners to deploy a
single, online access point for over 900 grant programs across the
Federal Government on www.grants.gov. Citizens and business benefit
through a simplified application process and reduced paperwork as the
result of using the online service. As of December 2005, USDA had
posted 404 funding opportunities and 57 application packages on
www.grants.gov. USDA has received 340 electronic applications from the
grants community via www.grants.gov.
We have adopted the tools and services provided by the Federal
Government's Integrated Acquisition Environment (IAE). This improves
our ability to make informed and efficient purchasing decisions across
USDA and helped us eliminate paper-based and labor-intensive processes.
IAE allows us to avoid the cost of building and maintaining separate
systems to post procurement opportunities and to record vendor and
contract information. Our purchasing officials have access to databases
from other Federal agencies on vendor performance.
USDA consolidated its disaster relief information by posting it on
www.disasterhelp.gov with similar information from agencies across the
Federal Government. First responders can search for assistance from
across the government in one place. USDA's disaster designations are
prominently available on the site. This makes it easy for citizens and
businesses to locate this critical information.
The USDA eAuthentication Service currently protects more than 160
of our applications. USDA employees and customers use a secure, single
sign-on to access these applications, thereby reducing our customer
support needs through improved security and usability. Every USDA
employee that needs access to any of these integrated systems has a
credential. USDA's eAuthentication Service was recently certified to be
compliant with the government-wide standard for interoperability and
was approved as a government-wide service provider. We integrated our
eAuthentication Service with Exports.gov in December 2005.
Our National Finance Center (NFC) is one of four Payroll Partner
Providers selected by the Office of Personnel Management. NFC has a 30-
year track record providing payroll services to more than 130 Federal
organizations, representing all three branches of the government.
Through the ePayroll Initiative, NFC is partnered with the Department
of Interior's National Business Center to provide payroll services to
approximately 50 percent of Federal employees.
NFC was selected as a Federal Government human resources service
provider for the Human Resources Management Line of Business. We
provide services to the Department of Homeland Security, Library of
Congress, and Government Accountability Office.
USDA proudly implemented a newly designed USDA Web site that
presents the Department's information and services by topic rather than
on an organizational basis (www.usda.gov). As part of our support of
the President's Management Agenda's promise of easy access to the
government, customers may now easily locate USDA's online information
and services. No longer do they have to traverse multiple agency Web
sites to track down what they need. In addition, ``MyUSDA'' permits
visitors to customize USDA's site to provide immediate access to the
information they regularly want to see. Our visitors are pleased that
our agencies are rapidly adopting the USDA ``look and feel.''
Currently, 24 Web sites have moved to the Department's Web standards,
and another 36 agency sites are in the process of doing so.
USDA provided its employees with expanded educational opportunities
by deploying AgLearn, www.aglearn.usda.gov, in partnership with the
Office of Personnel Management's, USALearning--part of the E-Training
Presidential Initiative. AgLearn provides employees around the world
with access to a robust, competency-based library of courses.
Geographically disparate offices are now able to easily collaborate in
developing learning services to meet common needs and reduce costs.
Employees and managers have constant access to their training
curriculum and training records. In an average month, 20,348 employees
completed 4,599 courses. AgLearn currently offers more than 2,300
agency-specific courses.
Our enterprise approach prevented USDA agencies from making
independent investments in multiple systems for each of these services
and numerous others. In addition, it greatly simplified the delivery of
services to the public, unifying information from services from across
the government.
ENTERPRISE ARCHITECTURE
Mr. Chairman, USDA is managing its enterprise architecture as an
enterprise-wide roadmap to achieve our mission within an efficient
information technology environment. USDA's Enterprise Architecture
Program identifies similar processes and opportunities to unify IT
solutions across our agencies. A Budget and Performance integration
conceptual data model has been created to improve consistency across
Departmental systems. Information on Federal and USDA e-Gov
architectures is being collected for easy dissemination throughout the
Department. We are also assembling the data needed, at both the
Departmental level and within individual agencies, to better organize
and analyze all our business processes, information needs, and
supporting technologies. Through the Enterprise Architecture
Repository, a shared view of the Department's current and future
business and IT environment are available for USDA decision-makers to
leverage IT services, avoid redundant IT investments, improve
information security, and align technology and business processes more
closely to the Federal Enterprise Architecture.
The USDA Enterprise Architecture Program complements the
Department's IT Capital Planning and Investment Control (CPIC) process.
USDA's central CPIC body reviews, monitors and approves all major IT
investments to ensure alignment with the Department's strategic goals
and objectives. The enterprise architecture provides a formal basis for
evaluating a single investment against other investments in terms of
its contribution to enhanced delivery of customer services and
opportunities for collaboration and reuse. In addition to strengthening
the CPIC process, the EA will enable USDA to improve key Department-
wide enterprise hardware, software, and service agreements. In
addition, USDA's E-Board reviews and makes final approval decisions
regarding the Department's IT investment decisions. This board is
comprised of the Under-Secretaries of the various Mission Areas. It is
chaired by the Deputy Secretary.
IT MANAGEMENT
Mr. Chairman, we at USDA understand our responsibility to manage
our IT assets and to ensure that major IT investments are completed on
time, and within scope and budget. To support these responsibilities,
USDA established an IT Investment and Project Management training
program. This program provides project managers and project staff with
the skills and competencies needed to ensure that all projects have a
strong business case, meet organizational goals and are completed
within their established cost and schedule goals. This training covers
Federal best practices such as capital planning and investment control,
information assurance, project management (PM), enterprise
architecture, acquisition, eGovernment, and telecommunications issues
as well as the nine knowledge areas specified by the Project Management
Institute (PMI) in the Project Management Body of Knowledge, the
industry standard for project management training. At the end of the
training, participants are eligible to take the examination
administered by PMI for certification as a Project Management
Professional (PMP). This training has provided us with a growing number
of PMI-certified project managers. Currently, USDA has 200 PMPs.
To supplement the 5-week PM training, we have identified and
delivered shorter classes to address more specific needs including:
Earned Value Management, the Project Management Lifecycle (a high-level
PM introduction) and Performance-Based Acquisition. These classes
expand the level of understanding of PM concepts and ensure that the
skills of our trained PMs are kept up to date.
We believe that all agencies can benefit from this training and
that USDA staff benefit from understanding other agencies' experiences.
In addition to USDA employees, we have trained staff from the
Environmental Protection Agency, the Department of Treasury, the
Department of Homeland Security and the Department of Education.
CONCLUSION
Mr. Chairman, as I mentioned earlier, we are working hard to use
technology to transform service delivery to USDA customers while
reducing costs. With the continued support of the Congress, I am
confident that we will continue to be successful in achieving these
objectives.
______
Prepared Statement of James Michael Kelly, Deputy General Counsel,
Office of the General Counsel
INTRODUCTION
Mr. Chairman and members of the Subcommittee, I am pleased to have
this opportunity to present our fiscal year 2007 budget request,
provide you with an overview of our agency, and address some of the
current activities and issues facing the Department.
The Office of the General Counsel (OGC) is the law office for the
Department. As an independent, central agency within the Department,
OGC determines legal policy and provides legal advice and services to
the Secretary of Agriculture and other officials of the Department of
Agriculture with respect to all USDA programs and activities.
OGC(s services are provided through 14 Divisions in Washington,
D.C. and 17 field locations. The headquarters for OGC is located in
Washington, D.C. The Office is directed by a General Counsel, a Deputy
General Counsel, a Director for Administration and Resource Management,
and six Associate General Counsels. The attorneys located in
headquarters are generally grouped in relation to the agency or
agencies served. Our field structure consists of four regional offices,
each headed by a Regional Attorney, and 13 branch offices. The field
offices typically provide legal services to USDA officials in regional,
State, or local offices.
CURRENT ACTIVITIES AND ISSUES
INTERNATIONAL AFFAIRS AND COMMODITY PROGRAMS DIVISION
During this past year, OGC has provided a significant amount of
assistance in connection with USDA's international activities. With
respect to World Trade Organization (WTO) matters, OGC worked
extensively with the Office of the United States Trade Representative
(USTR) to prepare the United States' brief in support of its claims
challenging the European Communities' (EC) suspension of approvals of
all applications for biotech products. This action is being brought
under the WTO Agreement on the Application of Sanitary and
Phytosanitary Measures (SPS Agreement). The United States also
challenged nine safeguard measures that have been enacted by six EC
member States banning several biotech products that were already
approved for sale in the European Union (EU) prior to 1998. The United
States contended that the EU has imposed ``undue delay'' in connection
with product approvals in violation of Article 8 of the SPS Agreement;
has not made decisions based on risk assessments as required under
Article 5.1; and has violated Article 5.5 which prohibits Members from
adopting arbitrary or unjustifiable distinctions in their level of
protection in ``different'' but comparable situations. A confidential
interim report was issued by the WTO in this case on February 7, 2006.
OGC attorneys have also continued to provide support to the USTR in
connection with the challenge brought in the WTO by the Government of
Brazil against virtually all aspects of the Department's domestic and
export-related cotton programs. This case has major implications for
the manner in which these programs are administered regarding cotton,
and the legal principles at stake may also affect other commodity
programs.
In other WTO matters, OGC attorneys have provided advice to
Departmental officials, primarily those in the Foreign Agricultural
Service (FAS), with respect to various sanitary and phytosanitary
issues, including reviewing responses to WTO notifications of proposed
regulatory changes. These attorneys also advised FAS personnel in the
review of various proposed changes to existing WTO agricultural
provisions that would be the framework for future WTO negotiations.
During the past year, OGC has also been involved in the
implementation of a large number of foreign assistance agreements under
which agricultural commodities acquired by the Commodity Credit
Corporation (CCC) are donated overseas. This includes involvement in
relief efforts addressing the humanitarian needs in Iraq and the Darfur
region of Sudan. This work has involved extensive review of draft
agreements, commodity procurement agreements, ocean transportation
issues, and cargo loss and damage claims. OGC has also provided legal
advice to FAS in relation to the operation of the Bill Emerson
Humanitarian Trust through which reserves of commodities may be made
available to meet unanticipated emergency needs and has assisted CCC's
Kansas City Commodity Office in reviewing the commodity procurement
processes under which agricultural commodities are acquired for their
donation overseas. In the area of international food assistance, OGC
reviewed and helped draft numerous agreements with private voluntary
relief organizations, the World Food Program of the United Nations, and
various foreign governments. This assistance included a combination of
donations and concessional credit sales of grains, oilseeds, and other
U.S. agricultural commodities.
The Trade Adjustment Assistance Program for Farmers has also
continued to require a significant amount of assistance from OGC
attorneys. In general, this program assists agricultural producers who
have incurred reductions in commodity prices due to increased imports
of agricultural products into the United States as the result of trade
agreements. At this point, a substantial number of appeals have been
filed with the U.S. Court of International Trade challenging FAS's
decisions on applications for payment. OGC attorneys are providing
assistance to the Department of Justice (DOJ) in responding to these
appeals.
OGC also provides advice to FAS concerning cost-reimbursable
agreements entered into by FAS and other USDA agencies with foreign
governments or other U.S. government agencies that are engaged in
international agricultural activities.
During the past year, OGC attorneys provided extensive assistance
with respect to the numerous commodity and conservation programs
implemented by the Department under various statutes, including the
Agricultural Adjustment Act of 1938, the CCC Charter Act, the Food
Security Act of 1985, and the Farm Security and Rural Investment Act of
2002. Most notably, with respect to 2004 hurricanes, OGC provided major
support to the efforts of the President to provide assistance to
agricultural producers affected by the unprecedented damage in Florida
caused by the occurrence of 3 successive hurricanes. Working with
senior Departmental officials and representatives of the Executive
Office of the President, OGC attorneys were able to provide the legal
framework under Section 32 of the Act of August 24, 1935 (Section 32)
so that payments could be made to producers within weeks of the
hurricane damage. Similarly, OGC has provided legal advice to the Farm
Service Agency (FSA) in the development of regulations and program
documents needed to deliver several billion dollars of disaster
assistance payments to producers under the Military Construction
Appropriations and Emergency Hurricane Supplemental Appropriations Act,
2005, and under Section 32 with respect to Hurricanes Ophelia, Dennis,
Katrina, Rita, and Wilma. OGC also continues to expend considerable
time in providing assistance on legal issues involving the sugar,
peanut, and dairy programs.
Title VI of the America Jobs Creation Act sets forth amendments to
existing statutes to terminate the Tobacco Price Support and Marketing
Quota Programs. In addition, this act establishes a 10-year, $10
billion program to provide payments to tobacco quota holders and
tobacco producers with the funds coming from assessments on tobacco
product manufacturers and importers. Implementation of this very
complex and important program is requiring the substantial devotion of
assistance by OGC.
FOOD AND NUTRITION DIVISION
With respect to USDA's nutrition assistance programs, OGC has been
heavily involved in: (1) the development, drafting and review of
legislative reports and congressional testimony; (2) the implementation
and enforcement of new legislation aimed at welfare reform and other
program improvements; and (3) the ongoing program integrity and
compliance initiatives. We expect the demand for legal services in
connection with these and other activities to remain constant in fiscal
years 2006 and 2007.
More specifically, during this past year, OGC attorneys provided
formal and informal advice on a number of issues affecting the
administration of the nutrition assistance programs. OGC provided
assistance in the drafting and subsequent enactment of section 780 of
the Consolidated Appropriations Act, 2005, which prohibits the use of
funds appropriated under that act to reimburse the administrative costs
of States under the Special Supplemental Nutrition Program for Women,
Infants and Children (WIC) for stores that receive more than 50 percent
of their revenue from WIC transactions. This prohibition represents a
significant cost savings for the WIC Program. OGC also worked
effectively in the development of legislative proposals to limit
categorical eligibility for the Food Stamp Program (FSP) to persons who
receive actual cash benefits under the Temporary Assistance for Needy
Families program and to authorize access, for program verification
purposes, to the National Directory of New Hires. These legislative
proposals supported the budgetary objectives of the administration. OGC
also provided advice to the Center for Nutrition Policy and Promotion
in connection with roll-out activities with respect to 2005 Dietary
Guidelines for Americans and the associated MyPyramid.
During the past year, OGC assisted in the defense of several legal
challenges to the nutrition assistance programs. Among other issues,
OGC worked closely with the DOJ Antitrust Division in the preparation
of a lawsuit to challenge the merger of two dairy companies which would
have severely restricted competition in the procurement of milk
contracts for the National School Lunch Program in Arkansas and
substantially contributed to the successful defense against allegations
of denial of due process raised by a Child and Adult Care Food Program
sponsor.
OGC participated in the preparation and review of numerous
significant documents, memoranda, rules, notices, and correspondence
during this past year. As examples, OGC reviewed a substantial number
of proposed and final Federal Register publications, including: (1)
interim and final rules establishing new standards for the approval and
operation of FSP electronic benefit transfer systems; (2) a proposed
rule to amend the FSP regulations to implement the discretionary
quality control provisions of Title IV of Public Law 107-171; (3) a
proposed rule to revise regulations governing WIC food packages; and
(4) a final rule to amend WIC regulations to address issues raised by
WIC State agencies, members of the WIC community and the U.S.
Government Accountability Office. Similarly, OGC provided legal review
of the documentary basis for the Department's nutrition assistance
response to disaster conditions caused by hurricanes Katrina, Rita, and
Wilma along the Gulf Coast.
OGC also provided advice on a number of issues affecting the
efficient administration of the nutrition assistance programs. OGC
provided valuable assistance and advice to Department officials
regarding the preparation of a joint letter signed by the Secretaries
of Agriculture and Health and Human Services issuing guidance to State
Governors regarding the eligibility of faith-based drug and alcohol
abuse treatment programs to act as retail food stores under the FSP.
This effort required close coordination with the White House Counsel's
Office and Office of Faith-Based and Community Initiatives, as well as
the Office of Management and Budget. OGC provided legal advice to FNS
in connection with the denial by FNS of the request of a State school
district to impose gender-specific seating requirements in cafeterias
operated under the National School Lunch Program. OGC also worked
closely with Department officials in the review of a State proposal for
the fundamental restructuring of the FSP application process with a
focus on improved efficiency and effectiveness of the delivery of
program benefits. This review required careful analysis of authorities
related to electronic signatures and record-keeping and to authorities
regarding merit pay requirements for State officials involved in the
certification of applicants. OGC continues to work closely with
Department officials engaged in evaluating and sanctioning States for
their performance in administering the FSP under the quality control
system.
MARKETING, REGULATORY AND FOOD SAFETY PROGRAMS
OGC staff are providing the strongest possible legal support to the
Food Safety and Inspection Service (FSIS) to ensure the safety of the
Nation's meat, poultry, and egg products. We participate fully in the
agency's work to enhance the effectiveness of the Hazard Analysis and
Critical Control Points (HACCP)/Pathogen Reduction regulations, to
support effectively the agency's compliance and enforcement program,
and to defend FSIS in legal challenges to the implementation of its
statutory authorities and regulations.
OGC attorneys continue to work with DOJ attorneys in defending
civil actions that have been initiated in Federal court against the
Department involving FSIS' food safety programs. One such case involves
a Bivens complaint filed by Nebraska Beef in the District Court for the
District of Nebraska alleging that FSIS employees improperly suspended
inspection services. Nebraska Beef has also filed a related lawsuit in
Federal court challenging FSIS enforcement actions. A second case
involves a Bivens complaint filed by Montana Quality Foods in the
District Court for the District of Columbia alleging that FSIS
employees took retaliatory action in enforcing FSIS' policy regarding
E. coli O157:H7 contamination.
OGC also provides assistance to FSIS in connection with its rule
making activities. Our attorneys work with FSIS staff from the early
stages of the agency's policy development activities, and participate
in an array of agency working groups and regulation development teams.
OGC has assisted FSIS in connection with ongoing rule making to
strengthen protections against exposure to the bovine spongiform
encephalopathy (BSE) agent. The interim rules require the removal of
certain animals and specified risk materials from the human food chain,
mandate additional process controls for establishments that use
advanced meat recovery systems, require establishments to hold meat
from cattle that have been tested for BSE until the test has been
confirmed negative, and prohibit the air-injection stunning of cattle.
We are working with the agency in developing a final rule that will
encompass a careful evaluation of the comments submitted in response to
the interim rule.
OGC also assisted FSIS on an array of rules, notices and directives
aimed at improving the Department's food safety program. The issues
involved included safe food handling practices, food security plans,
and emergency preparedness, and revisions to the agency's recall
procedures to improve the dissemination of recall information. We also
worked with FSIS and the Food and Drug Administration (FDA) to amend
food standards and regulatory requirements to provide a more coherent
approach to food safety.
OGC devotes substantial resources to FSIS field operations
activities and its critical compliance and enforcement programs. Our
attorneys work on a daily basis with the agency's compliance and
enforcement staff officials, with the Office of Inspector General
(OIG), and with DOJ to achieve successful prosecution of criminal,
civil and administrative cases involving violations of the meat,
poultry, and egg products inspection laws, and to prevent the
distribution of adulterated, misbranded, or uninspected products.
In the past year, OGC handled numerous criminal, civil, and
administrative cases in this area. The criminal cases involve not only
violations of the Federal Meat Inspection Act (FMIA) and Poultry
Products Inspection Act (PPIA), but also violations of provisions of
U.S. criminal laws relating to false statements, bribery, conspiracy,
and mail and wire fraud. The civil cases involved injunctions, seizure
actions, bankruptcy and claims collections actions and the defense of
civil lawsuits brought against the Department and its officials.
Typically, OGC prepares proposed indictments, information and
complaints, and provide whatever assistance is necessary for the
successful prosecution or defense of the cases.
OGC attorneys are responsible for prosecuting administrative
actions initiated by FSIS to withdraw, suspend or deny Federal meat and
poultry inspection or custom exemption services under the FMIA and PPIA
based on criminal convictions, as well as on serious HACCP and Standard
Sanitation Operating Procedures (SSOP) regulation violations.
The Department's programs for safeguarding the animal and plant
health of the United States is a matter of utmost importance to
American agriculture and to the public as a whole. OGC works very
closely with the Animal and Plant Health Inspection Service (APHIS) in
carrying out that agency's program responsibilities. APHIS's program
and regulatory activities continue to increase substantially. The focus
of our work with APHIS remains the development and implementation of
legally supportable measures to prevent the introduction and
dissemination of animal diseases and plant pests, to ensure the safe
entry of people and goods into the United States, and the facilitation
of agricultural trade in compliance with our international obligations.
The demands on OGC staff for timely and effective legal support
continue to increase proportionately.
During the past year, APHIS regulatory activities involving BSE
have placed extraordinary demands on our attorney resources. Among the
many challenging issues requiring extensive assistance was the agency's
regulatory response to BSE in North America, particularly the
litigation that followed on the publication of the rule to establish
BSE minimal-risk regions. In addition, we assisted APHIS in its work on
Asian longhorned beetle, emerald ashborer, grasshopper control, sudden
oak death syndrome (SOD), control programs for low-pathogenic avian
influenza, bovine tuberculosis, chronic wasting disease, and exotic
Newcastle disease.
In addition, requests for OGC's assistance in connection with
APHIS' regulation of biotechnology has continued to increase, and we
have devoted substantial resources to the biotechnology regulatory
programs and the implementation and enforcement of agency regulations.
This includes defending litigation challenging the agency's regulation
of genetically modified turf grasses.
OGC also handles a very substantial caseload of administrative
cases on behalf of APHIS to enforce the agency's regulations. OGC
attorneys have also continued our strong support for APHIS' Wildlife
Services activities and programs and have defended these programs in a
variety of litigation settings in the Federal courts.
In the past year, OGC attorneys reviewed over 150 dockets, as well
as many other documents relating to marketing orders, and provided
daily legal advice to client agencies in connection with a wide variety
of matters arising under both the fruit and vegetable and the milk
marketing order programs. Substantial legal services were devoted to
both formal and informal rulemakings. Formal rulemaking proceedings
presented complex and substantial amendments and revision to a number
of marketing order programs. Significant legal services were provided
in connection with enforcement and defense of these programs. There is
one administrative challenge to the legality of the California Raisin
marketing order which is pending. In addition, OGC has filed numerous
administrative complaints to enforce the terms of marketing orders
which require regulated entities to pay their assessments and to comply
with the requirements in the order. Significant legal services were
provided in connection with an administrative challenge to
classification determinations concerning Class I and Class II milk.
There are also a number of complaints pending in the Federal courts
filed by DOJ in order to obtain payments from milk handlers into the
producer-settlement fund.
An extensive amount of legal services was provided in the drafting
of regulatory language in various rulemaking proceedings. OGC continued
to provide legal assistance to the Agricultural Marketing Service (AMS)
Dairy Programs on several rulemaking proceedings in the Mideast, Upper
Midwest and Central Orders which provided for changes to the milk
pooling standards and related issues. OGC continued work on the ongoing
rulemaking proceeding involving potential changes in the producer-
handler definition in the Pacific Northwest and Arizona-Las Vegas
Orders including review of the recommended decision. OGC completed work
on the amendment of the Appalachian, Florida, and Southeast Florida
Orders to implement a temporary supplemental charge on Class I milk to
be paid to handlers who incurred extraordinary transportation charges
for moving milk to supply those markets because of the hurricanes in
August and September 2005. OGC also completed work on changes to all
the orders to reclassify milk used to produce evaporated milk and
sweetened condensed milk in consumer-type packages from Class III to
Class IV. OGC provided legal services on a rulemaking proceeding to
amend the Class I fluid milk product definition in all milk marketing
orders.
OGC continued to provide legal assistance to DOJ and the client
agencies in numerous administrative and Federal court cases involving
challenges to the constitutionality of generic advertising funded by
mandatory assessments in research and promotion programs. Since the
United States Supreme Court May 2005 ruling upholding the
constitutionality of the Beef Promotion and Research Act, in Veneman v.
Livestock Marketing Association, USDA is advancing those same arguments
in defense of the other challenged research and promotion programs. All
research and promotion programs continue to receive legal services in
the intervening period. For example, OGC expended substantial resources
litigating more than 100 administrative and Federal court First
Amendment cases arising under research and promotion programs. These
cases involve some of the most important, complex, and controversial
legal and public policy issues in constitutional and agricultural law.
Research and promotion programs cumulatively collect and spend over
$700 million a year on commodity promotions. OGC also provided
extensive legal analysis for a proposed implementation of a new
research and promotion program for mangos.
OGC expended substantial resources in connection with the Animal
Welfare Act and Horse Protection Act Programs. OGC attorneys serve as
agency counsel in administrative enforcement actions brought under
these two statutes, and in fiscal year 2005, OGC initiated 46
enforcement cases, and 49 decisions were issued in ongoing cases. In
addition, OGC reviewed and provided drafting assistance to APHIS in a
number of rulemaking actions for publication in the Federal Register.
OGC reviewed a variety of rulemaking and other documents in
connection with this program. OGC continued to work with and advise the
agency concerning program changes to better serve the grain industry in
a more cost effective and efficient manner. OGC attorneys provided
substantial advice and guidance in connection with a number of issues,
including reauthorization of the program, use of contracting authority
to provide inspection and weighing services and exemption of speciality
grain from inspection and weighing requirements.
In the Trade Practices area, we provide legal services under the
Packers and Stockyards Act (P&S Act), the Perishable Agricultural
Commodities Act (PACA), and the Capper-Volstead Act and provide the
liaison for the Department under the Memorandum of Understanding
between the Department, the Federal Trade Commission and the DOJ on
competition issues. Under the P&S Act, the attorneys of the Trade
Practices Division file administrative complaints to enforce the
provisions of the statute, requiring prompt payment for livestock and
poultry and ensuring that livestock auction markets and dealers are
solvent, provide accurate weights and measures, and account accurately
to sellers and producers of livestock.
In 2005, OIG conducted an audit of the competition investigations
and cases conducted by the Packers and Stockyards Program (P&SP). After
several months, OIG issued a report finding that P&SP had difficulties
defining and tracking investigations, planning and conducting
competition and complex investigations, and making agency policy
decisions. As a result, the report found that P&SP's tracking system
was not reliable, competition and complex investigations were not being
performed, and timely action was not being taken on issues that impact
day-to-day activities. The report also found that P&SP should increase
its communication and cooperation with OGC. As a result of the report's
findings, GIPSA has requested OGC's assistance in streamlining
procedures and in training its staff, and P&SP is seeking oral opinions
and legal guidance on a more frequent basis.
OGC has provided extensive legal services in support of the GIPSA
program in a case against Valley Pride Pack, Inc., (``Valley Pride''),
a beef slaughter and meat processing company with its corporate
headquarters and principal place of business in Norwalk, Wisconsin.
Valley Pride shut down, leaving cattle sellers unpaid for roughly $3.5
million worth of livestock purchases from late July and early August
2001. Following Valley Pride's financial collapse, OGC assisted in
preparing an analysis of unpaid livestock sellers' claims pursuant to
the P&S Act trust, which requires meat packers to hold inventories,
receivables and proceeds from the sale of meat or livestock derived
products in trust for the benefit of livestock sellers. The analysis
found $3.4 million in apparently valid, timely claims by cattle
sellers. These claims were subsequently paid by Valley Pride's primary
pre-petition lender, GE Capital, which held a security interest in
Valley Pride's inventory and receivables. Cattle sellers received
additional funds from Valley Pride's packer bond. Following the trust
and bond payouts, approximately sixty-five cattle sellers remained
unpaid for roughly $50,000 worth of cattle purchased by Valley Pride.
On behalf of GIPSA, OGC filed an administrative, disciplinary complaint
against Valley Pride alleging failures to make timely payment for
cattle purchases, and naming the company's sole owner and chief
executive officer, as a respondent, alleging that the violations of the
P&S Act occurred while the company was under his direction, management
and control. After GE Capital made allegations of fraud, OGC amended
the complaint against Valley Pride and the company's sole owner,
alleging that the respondents had engaged in unfair and deceptive
practices by creating false records, including invoices and payment
receipts, evidencing cattle and/or meat sales by Valley Pride to third
parties for which no sales actually occurred. Millions of dollars in
fictitious assets had been used to offset real liabilities in Valley
Pride's financial reports, thereby disguising the company's insolvency.
At the end of the fiscal year, the parties were seeking resolution of
the complaint through an agreement that would result in the full
payment to all livestock sellers. On January 30, 2006, just prior to
the scheduled hearing for GIPSA's administrative complaint against
Valley Pride and the company's owner, the case was resolved by a
negotiated consent decision. Respondents, Valley Pride and the
company's owner, agreed to cease and desist from further violations of
the Packers and Stockyards Act's prompt payment provisions and agreed
to keep records that fully and correctly disclosed all transactions in
their business. Valley Pride and the company's owner were also jointly
and severally assessed a civil penalty of $80,000. By agreement between
the parties, GIPSA agreed to hold $55,000 of the civil penalty in
abeyance to facilitate payments by respondents to cattle sellers who
still remained unpaid for cattle purchases by Valley Pride.
OGC has also provided legal services to GIPSA in the review of the
plan and data request for the Livestock and Meat Marketing Study
(LMMS), a study requested by Congress to review the impact of long term
contracting and use of captive supply by slaughtering packers. Captive
supply is defined by P&S Programs as livestock that are committed to a
packer more than 14 days prior to slaughter. The study was to review
the question of whether such longer term commitment impacts the
``spot'' or cash market for livestock. OGC assisted P&S in the
preparation of the information collection request for Departmental and
OMB clearance, meeting with OMB officials on a number of occasions to
address OMB's concerns regarding the agency's plans for the study and
the treatment of confidential data.
Trade Practices attorneys prepared and filed administrative
enforcement actions under the PACA. Of particular significance, the
Trade Practices Division has continued to litigate administrative
disciplinary cases arising out of the criminal convictions of eight
USDA inspectors and 12 individuals who were owners and/or employees of
PACA licensed produce firms located on the market. Fruit and Vegetable
Programs of AMS filed eight disciplinary complaints against nine
produce companies located on the Hunts Point market: (1) Post & Taback,
Inc., (2) M. Trombetta & Sons, Inc., (3) Cooseman's Specialties, Inc.,
(4) KOAM Produce, Inc., (5) King Sol Produce, (6) BT Produce Co., Inc.,
(7) Kleiman & Hochberg, Inc., (8) G&T Terminal Packaging Co., Inc. and
(9) Tray Wrap, Inc. The complaints alleged that the companies, which by
statute are held to an identity of action with their employees or
agents, had violated section 2(4) of the PACA by making illegal
payments to Federal produce inspectors. Seven of the complaints sought
a sanction of revocation of the company's PACA license. One complaint
sought a sanction of a finding of the commission of flagrant or
repeated violations of section 2(4) of the PACA, rather than a
revocation, because the company no longer had a PACA license. The
sanctions sought also include employment sanctions against the
principals of the nine produce firms.
One of the eight cases, King Sol Produce, was decided by default.
The remaining seven cases went to hearing before the Department's
Administrative Law Judges (ALJ's), who have issued decisions in all
seven cases (though the Respondent in BT Produce Co., Inc., has asked
the Chief ALJ for reconsideration). Six of the ALJ decisions were
appealed to the Department's Judicial Officer (JO), who has decided
four of them (Post & Taback, Inc.; G&T Terminal Packaging Co. Inc.;
Tray Wrap, Inc.; and M. Trombetta & Sons, Inc.), finding that the
companies committed the alleged violations and issuing the sanctions
requested by Fruit and Vegetable Programs. G&T Terminal Packaging Co.,
Inc., and Tray Wrap, Inc., has been appealed to the 2nd Circuit Court
of Appeals. One case, Post & Taback, Inc., was appealed to the U.S.
Court of Appeals for the D.C. Circuit, which upheld the JO's decision
(Post & Taback, Inc. v. Department of Agric., 123 Fed Appx. 406 (D.C.
Cir. 2005).
Also in support of the PACA Program, OGC and DOJ continued to
defend against a challenge to an amendment of a PACA regulation that
added coating or battering to the list of operations that do not alter
the character of a fresh fruit or fresh vegetable so that it is no
longer a ``perishable agricultural commodity''. The lawsuit, filed by a
bankrupt wholesale grocer and retailer, argues that the regulatory
amendment conflicts with the language and purpose of the PACA, and that
the rulemaking process was inadequate. On June 7, 2004, a judge in the
U.S. District Court for the Eastern District of Texas granted USDA's
Motion for Summary Judgment. The judge found that the ``PACA
ambiguously states that fresh fruits and vegetables of every kind and
character' are perishable agricultural commodities'' and that, where
legislative language is ambiguous, the Secretary is granted the
authority to issue regulations to determine what may be classified as
fresh fruits and vegetables for the purposes of the PACA. The judge
also found that USDA followed the appropriate procedural requirements
in amending the regulation. Therefore, the court found that the
amendment to the regulation is valid. The grocer/retailer appealed the
decision to the 5th Circuit Court of Appeals. Oral argument was held in
New Orleans, Louisiana, on April 5, 2005. On February 1, 2006, the 5th
Circuit Court of Appeals issued an unpublished decision affirming the
decision of the U.S. District Court for the Eastern District of Texas
upholding the validity of the amendment to the regulation. In its brief
decision, the 5th Circuit affirmed, finding the regulation to be valid
``for the reasons articulated by the district court in its
comprehensive opinion''.
RURAL DEVELOPMENT
OGC also provides legal services to USDA agencies which manage some
of America's largest loan portfolios. OGC continues to be heavily
involved in debt collection, foreclosure, and bankruptcy matters for
FSA, Farm Loan Programs and the Rural Development (RD) mission area.
OGC is assisting these agencies' implementation of provisions of the
Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 that
became effective on October 17, 2005, and greatly affected USDA as a
creditor. OGC also has provided significant assistance in identifying
and utilizing existing and new emergency authorities, responding to
claims, and coordinating benefits in response to the many disasters
that have recently impacted the southern United States including
Hurricanes Katrina and Rita. OGC also has supported the agencies'
efforts to implement eGovernment initiatives and move towards web-based
credit application, servicing, and notification procedures.
OGC continues to defend approximately 300 existing and newly filed
lawsuits involving approximately 800 RD multi-family housing projects
whose owners want to prepay their loans and, thereby, remove a
significant number of low-income housing units from rural America. OGC
has devoted significant time and resources to working closely with DOJ
to support litigation efforts, particularly in providing information
and analysis in the context of settlement negotiations.
OGC is working extensively with the Rural Housing Service (RHS) on
implementing several new programs. The Multi-Family Housing
Preservation and Revitalization Restructuring Demonstration Program
(Revitalization Program) will revitalize selected Rural Rental Housing
(RRH) properties throughout the Nation. The Revitalization Program
allows for loan servicing tools previously unavailable to RHS such as
grants and subordinates section 515 loans with all principal and
interest deferred as a balloon payment at the end of the loan term..
OGC is currently working with RHS on drafting the Notice of Funding
Availability and the legal documents necessary for restructuring the
owners' loans. The Multi-Family Housing Voucher Demonstration Program
(Voucher Program) will provide continued rental assistance to low-
income households in prepaid RRH projects. RHS is providing continued
rental assistance in the form of 1-year portable vouchers. OGC is
working with the Department of Housing and Urban Development and RHS in
drafting a Notice of Funding Availability and Interagency Agreement for
the Voucher Program. OGC also assisted RHS in developing its
Preservation Revolving Loan Fund program which was authorized as a
demonstration program under the Agriculture, Rural Development, Food
and Drug Administration, and Related Agencies Appropriations Act, 2005.
OGC also has assisted the Rural Business-Cooperative Service (RBS)
on various new and continuing initiatives. OGC reviewed RBS' final
rules implementing the new Energy Systems and Energy Efficiency
Improvements Program and the Biomass Research and Development Program
under the Farm Security and Rural Investment Act of 2002. OGC also
provided RBS legal assistance in revising its Business and Industry
loan regulations. RBS has needed increased support on secondary market
issues and its Rural Business Investment Program that funds rural area
venture capital investment activities. In addition, OGC is providing
significant support on several major defaults on guaranteed Business
and Industry loans and negligent servicing by guaranteed lenders. OGC
continues to experience a significant increase in requests for advice
regarding various grant and cooperative agreement issues, and is
assisting RBS' and RHS' implementation of the President's Faith-Based
and Community Initiative to ensure that faith-based and community
organizations have equal access to USDA programs.
The need for legal services supporting the programs of the Rural
Utilities Service (RUS) continued to grow significantly in fiscal year
2005 as a result of sustained increased funding for RUS programs,
increased responsibilities for RUS resulting from the passage of the
Farm Security and Rural Investment Act of 2002, and the impact of
continuing changes in the electric and telecommunications program
structures and policies.
The RUS Electric Program is the largest of these programs. Several
of these loans involved large-scale generation and transmission
projects. OGC furnishes the legal services necessary for RUS to
document and secure these obligations, thereby enabling these programs
to be delivered. OGC is providing a full range of legal services to RUS
to enable successful administration of these programs, including the
servicing of a direct and guaranteed loan portfolio.
The 2002 Farm Bill amended the Rural Electrification Act of 1936 by
adding a new Title VI which established a Broadband Direct and
Guarantee Loan Program (Broadband Program) in RUS. The RUS Broadband
Program plays a critical role in implementing the President's
initiative to make access to broadband technology available to every
American by 2007. OGC furnishes all legal services necessary to
establish and maintain this program. Since the beginning of this
program in February 2003, OGC has furnished all legal assistance needed
by RUS in approval of all loans. During fiscal year 2005, OGC improved
the legal documentation packages necessary to protect the government's
financial interests in these transactions. During fiscal year 2005, OGC
began assisting RUS and DOJ in collecting obligations from
telecommunications borrowers aggregating approximately $50 million. The
bulk of these obligations to the Broadband and Internet Services
Programs were established as pilot programs in 2001. The volume of
pilot projects in legal collection is expected to continue growing in
fiscal year 2006 and carry over into fiscal year 2007 as an increasing
number of pilot projects default.
The 2002 Farm Bill also established a new guarantee program under
Section 313A of the Rural Electrification Act which provides for RUS to
issue guarantees of bonds and notes issued by lenders to electric
cooperatives. OGC assisted RUS in developing the regulations to
implement this new program. OGC provided substantial legal assistance
to RUS in developing the legal documentation that enabled RUS to
deliver its first guarantee. OGC efforts to provide legal support to
RUS for administering these guarantee agreements will continue into
fiscal year 2007.
In addition to the new Broadband Program, OGC is providing legal
services to support several other new RUS initiatives. OGC also
supports the RUS mission by providing legal services to RUS that enable
the agency's participation in the Rural Telephone Bank (RTB). During
fiscal year 2005, RTB's demand for OGC legal services to support the
process of dissolving the public/private RTB rose dramatically. As
proposed in the 2007 President's budget, RTB is expected to be
dissolved by fiscal year 2007. However, the complex process of winding
up the affairs of RTB is expected to continue to place significant
demands on OGC legal resources beyond the dissolution and distribution
of RTB stock proceeds to the shareholders that is scheduled to occur
during fiscal year 2006.
Congress recently amended the Rural Electrification Act of 1936 to
add new authority for RUS, in collaboration with the Department of the
Treasury, to extend the maturities for outstanding loans associated
with power plants and transmission lines which have been determined to
have longer useful lives, e.g. in the case of a nuclear plant whose
license has been extended by the Nuclear Regulatory Commission (NRC)
for an additional 20-year term. The documentation and procedures for
implementing this new authority, which also involves assessing a fee
for this service, will need to be developed. OGC anticipates this
program will be used extensively during fiscal year 2007.
OGC continues to provide significant assistance in the area of
Federal crop insurance. OGC supports DOJ in defending several multi-
million dollar lawsuits brought by insured farmers and companies
reinsured by the Federal Crop Insurance Corporation (FCIC). These suits
involve a wide variety of issues government committed an error or
omission as to its 2000 sugar beet policy. OGC also is providing a
great deal of support to the Risk Management Agency (RMA) with regard
to the financial collapse and liquidation of one of its largest
insurance providers, implementation of new risk management programs
developed by the private industry, and responding to new and emerging
diseases and the spread of existing diseases. OGC also is assisting
RMA's development of a new combo policy that incorporates the
provisions of the actual production history and various revenue plans
of insurance into a single policy, and updates of numerous other crop
insurance policies.
Implementation of the Agriculture Risk Protection Act of 2000
continues to increase the responsibilities of RMA and OGC. Compliance
efforts have included the development of administrative
disqualification, suspension, and debarment actions against producers,
agents, loss adjusters, reinsured companies and the update of
associated regulations. OGC also is assisting RMA's development of
conflict of interest requirements for reinsured companies, agents and
loss adjusters and reviewing administrative actions to alleviate fraud,
waste and abuse in the program.
OGC continues to work with Department officials to reduce
regulatory burdens and eliminate obsolete and unnecessary regulatory
requirements, particularly in the areas of rural development, farm, and
utility lending. Increased OGC assistance has been required in the
defense of several significant civil rights actions against FSA and RHS
and the continued implementation of the Pigford consent decree. We are
assisting RHS and FSA in streamlining and rewriting loan-making and
servicing regulations for the Guaranteed Single Family Housing Loan
Programs, the Community Facilities Loan and Grant Programs, and the
Farm Loan Programs. Our efforts on these long-range projects will
continue into fiscal year 2007.
NATURAL RESOURCES
OGC continues to provide substantial legal assistance related to
Forest Service (FS) land management planning and program area
compliance with environmental and administrative laws and regulations.
Litigation involving agency compliance with the National Environmental
Policy Act (NEPA), the National Forest Management Act (NFMA) and the
Endangered Species Act (ESA) continues apace, with approximately 170
cases pending at the end of fiscal year 2005, the same level as the
previous year. OGC anticipates this level of litigation to continue or
increase. Examples of litigation regarding program matters and
regulatory actions include litigation related to the National Fire
Plan, the State Petition Rule regarding roadless areas, the Planning
Rule, the Northwest Forest Plan, the Sierra Nevada Framework and the
Healthy Forest Restoration Act. Project level litigation involves among
other things, timber sales, grazing permits, and special use
authorizations.
OGC has provided extensive assistance regarding the preparation
and defense of the FS's 125 Land and Resource Management Plans.
Significant legal services were provided in association with
development of interim direction and other guidance respecting the
agency's revised NFMA planning regulation. The implementation of the
revised NFMA planning regulations is underway in forest plan revisions,
requiring a heavy investment of OGC legal services. OGC continues to
devote substantial time and resources to assisting the FS with large-
scale planning initiatives and project preparation.
USDA and FS efforts regarding the President's Healthy Forests
Initiative and the Healthy Forests Restoration Act have also required
significant assistance from OGC. This initiative will continue to
require a substantial investment of OGC time and effort in defending
agency reforms associated with this initiative. Numerous lawsuits are
ongoing that challenge these reforms.
OGC continues to provide legal advice to ensure FS and Natural
Resources Conservation Service (NRCS) compliance with Federal
administrative laws, such as the Administrative Procedure Act, the Data
Quality Act, the Federal Advisory Committee Act, the Freedom of
Information Act, the Paperwork Reduction Act, the Privacy Act,
Executive Orders, and other authorities governing Federal
decisionmaking, which can and do arise in a variety of legal and
factual settings.
In the recreation area, OGC drafted several FS directives
implementing a new regulation governing management of off-highway
vehicle use on National Forest System (NFS) lands. OGC provided
significant legal advice regarding a final rule providing for cost
recovery for processing special use applications and monitoring
compliance with special use authorizations. OGC drafted a memorandum of
understanding (MOU) among 5 Federal agencies and 31 shooting sports
organizations regarding shooting sports activities on Federal lands.
OGC created and updated standard special use authorization forms.
Additionally, OGC developed FS accessibility guidelines for outdoor
developed recreation areas and trails on NFS lands. OGC drafted a
directive that extended the maximum term for FS outfitting and guiding
permits from 5 to 10 years. OGC assisted with implementation of
interagency recreation fee legislation that supplants the recreation
fee authority in the Land and Water Conservation Fund Act and the
Recreational Fee Demonstration Program statute. OGC defended a legal
challenge to the FS's national trail classification system. OGC also
provided assistance to the FS in requiring States and other non-Federal
governmental entities that hold FS special use permits to insure and
indemnify the United States under those permits.
In the forest management program area, OGC continued to provide
litigation support to DOJ in collecting millions of dollars in damages
owed the government by defaulting timber sale purchasers. OGC continued
to provide assistance to DOJ in on-going settlement negotiations of
several consolidated cases, at one time numbering twenty, concerning
the collection of tens of millions of dollars in principal damages plus
interest owed the government pursuant to orders issued in two of the
representative consolidated cases. To date, the government has
collected more than $16 million in damages from the consolidated cases.
OGC provided legal assistance on the defense of approximately 25
lawsuits challenging timber sale suspensions, modifications and
cancellations, and alleging breach of contract for unlawful
suspensions, modifications and cancellations seeking tens of millions
of dollars. Additionally, OGC provided legal assistance in drafting
contract provisions to limit liability for contractual damages and to
clarify the obligations of the parties to the timber sale contract. OGC
continued to revise and present, twice annually, a 3-day course on
Contract Law to train FS contracting officers on various aspects of
contract law as it relates to their daily program activities.
OGC continues to provide legal advice and assistance to FS
regarding implementation of stewardship contracts and other forms of
agreement which allow the agency to achieve forest resource management
objectives in exchange for forest products. Under these stewardship
contracts, timber is harvested while contractors perform services, such
as road and trail maintenance, watershed restoration and restoration of
wildlife habitat. OGC has reviewed and provided advice on the standard
contract form and is working with the agency to adapt other instruments
for use in a stewardship setting.
As the FS continues to implement OMB circular A-76 on competitive
outsourcing, OGC has continued to serve as its legal advisor in this
effort. OGC anticipates committing significant time and resources to
the provision of advice and assistance in this area.
In congressional matters, the Natural Resources Division (NRD)
provided extensive assistance in drafting various legislative
proposals, including the FS's partnership initiative and
reauthorization of the Secure Rural Schools and Community Self-
Determination Act of 2000, and various FS appropriations provisions.
NRD continued to provide assistance in addressing legal issues
concerning implementation of the administration's Healthy Forest
Initiative and related matters. NRD assisted the FS Legislative Affairs
staff in preparation for numerous Congressional hearings. The
Conservation and Environment Division provided similar assistance to
the NRCS on legislative proposals affecting the agency's programs and
activities.
OGC has continued to work closely with the FS and the NRCS on real
property matters. For example, OGC provided legal services to both
agencies for the acquisition of lands and conservation easements under
various programs, almost 500 easements under the Farm and Ranch Lands
Protection Program for NRCS alone in fiscal year 2005. Numerous land
transactions requiring the preparation of contracts, environmental
compliance documents, land titles, and closing documents have occurred
during the last year. OGC also provides legal services regarding access
and rights of way to public lands, title claims and disputes, treaty
rights, land appraisals and surveys, and other issues incident to the
ownership and management of real property assets of the government. The
agency's real estate practice is divided among its Washington DC
office, which primarily handles legislative, regulatory, and policy
matters, and the regional and field offices which conduct most of the
transactional work.
OGC has provided legal services on a number of significant issues
concerning tribal relations. OGC assisted DOJ in the successful defense
of suits alleging violations of the Religious Freedom Restoration Act
and the Establishment Clause regarding land management activities in
Arizona and Nevada. OGC provided substantial legal assistance regarding
Federal laws, such as those concerning American Indian treaty rights
and religious freedom, and historic and archaeological resource
protection. OGC drafted legislation that would enhance FS tribal
relations in areas involving access, use of forest products, and
reburials of Indian remains. OGC assisted the FS in drafting
regulations and guidelines to implement the Tribal Forest Protection
Act of 2004. OGC also participated on FS sacred sites team, which is
developing policy to protect tribal sacred sites on NFS land, as
required under Executive Order 13007. OGC conducted trainings for FS
employees in the field and Washington D.C. office regarding Indian law
and tribal issues. OGC has provided legal services on a number of
significant issues concerning tribal relations.
OGC counseled FS on a number of wilderness and wild and scenic
river management issues, including representation in litigation and
issuance of opinions involving commercial outfitter operations,
placement of structures and installations, and management plan and
protection requirements. OGC provided analysis of revisions to an
agreement between the FS and a fish and wildlife organization
representing States, addressing jurisdictional issues and agency
decision-making authorities. OGC assisted with drafting and review of
revisions to Forest Service Handbook (FSH) provisions pertaining to
wilderness management and wild and scenic river evaluation procedures.
OGC assisted with drafting and implementation of an appeal decision
involving fishing and boating user conflicts on a designated river in
South Carolina.
OGC has provided the FS extensive assistance regarding its
cooperative authorities. In support of the FS's new Partnership Office,
OGC drafted sections of the FS Partnership guide on ethics and conflict
of interest. OGC also assisted the FS in drafting revisions to its FSH
direction regarding the payment of overhead costs by FS cooperators. In
addition, OGC advised the FS on drafting of numerous MOUs and
cooperative agreements.
In the minerals area, OGC provided extensive assistance to the FS
in promulgating a final rule clarifying when authorization is required
before a person can commence mining on NFS lands under the United
States mining laws. OGC has experienced an increase in demand for legal
services as the FS undertakes program reviews and issues instructions
due to the passage of the Energy Policy Act of 2005. OGC also provided
significant assistance to the FS and DOJ in defending precedential
litigation challenging minerals projects on NFS lands. OGC helped the
FS by analyzing the implication of numerous legislative proposals on
the disposal of minerals on NFS lands.
OGC provided extensive assistance to FS regarding hydroelectric
licensing projects on NFS lands, including counseling FS regarding
conditions on licenses, cost accounting requirements, and compliance
with Federal Energy Regulatory Commission's (FERC) licensing
procedures. OGC worked with counsel from the Departments of the
Interior and Commerce to draft regulations in 90 days providing for
expedited hearings involving challenges to conditions placed on
hydropower licenses, as required under the Energy Policy Act of 2005.
OGC provided guidance to the FS regarding the implications of the
Energy legislation on the FS's conditioning authority, the information
required to support filing of such conditions, and the hearing process
that will occur before the Department of Agriculture's administrative
law judges.
The Conservation and Environment Division (CED) provided legal
advice and services to the NRCS regarding its programs for natural
resource conservation on private or other non-Federal farm, range,
pasture and nonindustrial forest lands, including programs authorized
by the Food Security Act of 1985 and other statutory authorities. The
1985 Act, as amended in 2004, authorizes approximately $17 billion in
conservation funding for the 2002-2014 period. In total, NRCS received
more than $2.8 3.2 billion for natural resource conservation programs
in fiscal year 20054, leading to an increase in requests for program
related legal services. OGC provided legal counsel to the agency in
developing new or revised regulations, standard form documents, and
internal guidance needed to administer several conservation program
authorities, such as the Conservation Security Program and the Farm and
Ranch Lands Protection Conservation Program Technical Service Provider
initiative. In addition, the administration of the Healthy Forest
Reserve Program was transferred to NRCS from the FS in fiscal year
2005. OGC provided assistance in reviewing and drafting the regulation
implementing that program. The following are examples of natural
resource conservation program areas where legal advice and services
were provided by OGC to NRCS and the Department in fiscal year 20054:
(1) publishing revised regulations for the Conservation Security
Program which is authorized at $6 billion in program funding through
2015; (2) negotiating and reviewing of cooperative agreements,
conservation easements, and restoration agreements and/or providing
title review across the easement programs and the purchase of several
hundred conservation easements under the Grassland Reserve Program, the
Emergency Watershed Protection Program, the Farm and Ranch Lands
Protection Program, and the Wetland Reserve Program (WRP). As an
example of the scope of thisis work, OGC has assisted NRCS in enrolling
146,111 1,633,3 acres into the Wetland Reserve Program through 907
easements or agreements. OGC provides title review for easement
acquisitions as well as reviewing restoration contracts. It is
anticipated that this program will continue to grow at an additional
acreage increase of 150,000--200,000 acres per year; (3) assisting with
enrolling 384,794 acres through 1,219 agreements in the Grassland
Reserve Program, and 86,209 acres through 507 easement in the Farm and
Ranch Lands Protection Program; and (4) providing training sessions for
NRCS employees related to easement program implementation at two
national meetings.
OGC also assisted the Department in reviewing and commenting on
regulations promulgated by the Environmental Protection Agency (EPA)
under the Clean Water Act for oil spill prevention and for point source
pollution control as they relate to farms, and regulations under the
Clean Air Act for the particulate matter. In addition, OGC assisted the
Department in reviewing the Air Quality Compliance Agreement developed
by EPA for animal feeding operations.
The CED Pollution Control Team (PCT) provided legal services and
advice for all USDA agency matters related to the Resource Conservation
and Recovery Act (RCRA) and Comprehensive Environmental Response,
Compensation, and Liability Act (CERCLA). During the most recent fiscal
year, the PCT negotiated with responsible parties to obtain substantial
contributions to cleanup costs or cleanup work performed by responsible
parties of more than $24 million. OGC also provided advice on
compliance with pollution control standards concerning USDA programs
and facilities, and provided advice on hazardous materials liability in
real property transactions. Specific PCT efforts on behalf of USDA on
pollution control matters include the following: (1) OGC is continuing
to provide legal support to the FS as the lead agency for the cleanup
of 9 phosphate mine sites contaminated with selenium in Southeastern
Idaho where total response costs to address selenium contamination are
projected to run as high as $225-450 million. This support includes
negotiating Administrative Settlement Agreements and Orders on Consent
and Consent Decrees with potentially responsible parties that conducted
the phosphate mining under the Mineral Leasing Act; and (2) OGC
continues to defend against claims concerning potential groundwater
contamination by carbon tetrachloride used to fumigate grain at
multiple former CCC grain storage facilities. OGC will continue to
represent CCC in negotiating cleanup action at these affected sites.
Such settlements will ensure appropriate response actions are taken to
remediate aquifer contamination.
With the passage of the Forest Service Facilities Realignment and
Enhancement Act of 2005 (FSFREA), OGC anticipates a significant
increase in requests for advice from the FS on the disposal of surplus
facilities as the FS reduces its operations and maintenance costs on
surplus facilities by selling them. This new authority, which provides
that an unlimited number of administrative sites may be conveyed, will
require greater OGC allocation of effort to ensure that the facilities
are transferred from Federal ownership in accordance with the necessary
CERCLA Section 120(h) requirements.
GENERAL LAW DIVISION
The General Law Division (GLD) provides legal services to all
agencies of the Department concerning those areas of law that apply
generally to all agencies of the Federal Government. These services
include, but are not limited to, the determination of claims filed
under the Federal Tort Claims Act, personnel and labor matters,
procurement, grants, fiscal law issues, and reviewing annually hundreds
of Freedom of Information Act (FOIA) and Privacy Act appeals, each
involving hundreds of pages of documents, in order to insure that the
various agencies of the Department do not release or withhold documents
inconsistent with applicable law. In addition, GLD attorneys assist DOJ
with any litigation that arises in these and other areas, and represent
the Department before the USDA Board of Contract Appeals and the Merit
Systems Protection Board.
GLD also serves as legal counsel on program matters to specific
client agencies in the Research, Education, and Economics (REE) mission
area as well as Departmental Administration and staff offices such as
the Office of the Chief Financial Officer (OCFO), Office of the Chief
Information Officer (OCIO), the Office of the Chief Economist (OCE),
and the National Appeals Division. As program counsel to the REE
mission area, GLD commits significant resources to the interpretation
of REE program authorities, review of proposed agreements, and counsel
regarding the special relationship of the Department with land-grant
colleges and universities. As an example of work for staff offices, GLD
has worked closely with in drafting item designation and labeling rules
for the Federal Biobased Products Preferred Procurement Program that
will be published in 2006.
During the past fiscal year, GLD worked closely with employees and
officials of APHIS and other Departmental officials regarding the
confidentiality and releasability issues posed by the creation of a
National Animal Identification System (NAIS). Since the Secretary
announced that the NAIS should be maintained as a private system that
can be accessed by State and Federal officials, we continue to be
involved in advising APHIS regarding the potential applicability of
FOIA to records in a privately maintained system. In connection with
the BSE surveillance program, GLD also provided APHIS with extensive
support with respect to interpretation of agreements and procurement
contracts for equipment and sample collection, including defense in
protest litigation.
Also during the past fiscal year, GLD attorneys provided
significant legal resources advising policy officials on election
reform for FSA County Committees pursuant to section 10708 of the Farm
Security and Rural Investment Act of 2002. GLD continues to advise FSA
regarding various issues related to the county committee election
process, as well as proposed regulations implementing the process.
GLD provided extensive advice to OCFO in the past year with respect
employment matters related to the reduction in Thrift Savings Plan work
and with respect to the evacuation of the National Finance Center from
New Orleans due to Hurricane Katrina. GLD also worked closely with the
Office of Procurement and Property Management and other agencies in
providing support for procurement and other response and recovery
actions taken in response to Hurricanes Katrina.
GLD continues to provide legal advice, and contract protest
litigation defense, for the consolidation of Federal agency
recreational reservation systems into the USDA FS and United States
Army Corps of Engineers National Recreation Reservation Service as part
of the Recreation One Stop Initiative. GLD also defended multiple
protests against the FS award of 5-year national contracts for catering
services for firefighters.
LITIGATION DIVISION
Litigation Division attorneys, in cooperation with attorneys from
DOJ and other divisions in OGC, presented USDA's position in appellate
courts. These efforts included providing assistance to the Office of
the Solicitor General and DOJ counsel, who represented USDA before the
Supreme Court in Veneman v. Livestock Marketing Association, arguing
that Congressionally-mandated assessments for generic advertising for
beef research and promotion programs do not violate the First Amendment
speech rights of cattle producers who disagree with the content of the
advertisements. The Supreme Court issued an opinion which agreed with
the position taken by the Department. In addition, our attorneys
assisted DOJ attorneys in presenting, in the Courts of Appeals and the
Supreme Court, arguments in cases addressing similar programs for pork
and dairy products, which also have now been successfully resolved.
The Litigation Division assisted DOJ attorneys in winning a
reversal by the Sixth Circuit of an adverse district court decision
invalidating the Attorney General's decision pursuant to the Westfall
Act, 28 U.S.C. 2679(d)(1), to certify that a FS employee was acting
within the scope of his employment when the employee denied that the
allegations of the plaintiff's claim were true; and also assisted DOJ
in representing the Secretary before the District of Columbia Circuit
in a case addressing whether a party can receive attorneys' fees and
costs under the Equal Access to Justice Act when the party has won a
preliminary injunction against the United States, but not a final
decision on the merits of the lawsuit. Litigation Division attorneys
also assisted DOJ in representing the Secretary before the Federal
Circuit in a case addressing the basis for a contract default
termination and the subsequent award of damages to the contractor; and
assisted DOJ in defending before the First Circuit the Secretary's
National Organic Final Rule, 7 C.F.R. Part 205, promulgated pursuant to
the Organic Foods Production Act of 1990, 7 U.S.C. 6501-6523. In
addition, actions on other cases handled by Litigation Division
attorneys include: (a) the District of Columbia Circuit upheld the
authority of the Department to interpret legislation and set interest
rates for sugar loans; (b) the District of Columbia Circuit upheld the
Secretary's adverse administrative action against a company licensed
under the PACA after an employee of the company was convicted of
criminal charges related to inspections of the company's produce; and
(c) the Sixth Circuit upheld the Secretary's administrative action
against a horse trainer found to have violated the Horse Protection
Act, 15 U.S.C. 1821-1831.
LEGISLATION DIVISION
During fiscal year 2005, OGC reviewed approximately 260 legislative
reports on bills introduced in Congress or proposed by the
Administration, and cleared for legal sufficiency written testimony of
approximately 380 witnesses testifying on behalf of the administration
before Congressional committees. The Division provided extensive
assistance to USDA policy officials in drafting and analyzing
legislative proposals and amendments, and coordinated the legal review
for USDA in the clearance of legislation and ancillary legislative
materials. The Division drafted or provided technical assistance in the
preparation of bills and amendments for the Secretary, members of
Congress, Congressional committees, Senate and House Offices of
Legislative Counsel, and agencies within USDA, including the: (1)
Agriculture, Rural Development, Food and Drug Administration and
Related Agencies Appropriations Act for fiscal year 2006, Public Law
109-97; (2) Emergency Supplemental Appropriations to Address Hurricanes
in the Gulf of Mexico and Pandemic Influenza, 2006, Division B,
Department of Defense Appropriations Act for fiscal year 2006, H.R.
2863; (3) Deficit Reduction Act of 2005, S.1932, H.R. 4241; and (4)
legislation to protect the confidentiality of information collected in
the developing Livestock Identification System.
CIVIL RIGHTS
For over 8 years, USDA has engaged in massive efforts to reform its
civil rights performance. Critical to the achievement of these goals
was the creation, in 1998, of the Civil Rights Division (CRD) within
OGC. Recently, the Civil Rights Division reorganized into two distinct
divisions; the Civil Rights Litigation Division (CRLD) and the Civil
Rights Policy, Compliance and Counsel Division (CRPCCD). Staffed with
attorneys with specialized expertise in civil rights and Equal
Employment Opportunity (EEO) law, CRLD and CRPCCD maintain an
extraordinarily diverse workload servicing the civil rights needs of
the Secretary and USDA's agencies and staff offices.
CRLD's litigation duties include 5 active program class actions in
Federal District Court and 8 active employment class actions, most of
which are pending before the Equal Employment Opportunity Commission
(EEOC). The requested damages in these class actions total over $45
billion. In addition, CRLD anticipates adding at least 1 new employment
class action in the coming year to its litigation workload.
USDA continues to implement the April 14, 1999, consent decree in
Pigford v. Johanns, orginally, Pigford v. Glickman (Pigford). The
Pigford complaint was filed in 1997 on behalf of African American
farmers alleging racial discrimination in farm lending and benefit
programs. The consent decree provided a framework which assigned tasks
and time frames to specific parties to resolve the claims. Under the
Consent Decree framework, claimants determined by the Facilitator to be
members of the class could choose one of two ``tracks'' for processing
their claims.
Most claimants have chosen the more streamlined Track A which
allows the claimant to submit a claim form upon which the Adjudicator
issues a decision. A successful Track A claimant may receive a blanket
payment of $50,000, plus loan forgiveness. Under Track B, those who
believe they have evidence of extreme wrongdoing go before an
Arbitrator to seek larger damages.
As of January 31, 2006, 64 percent of the 22,244 Track A claims
submitted to the Adjudicator were decided in favor of claimants. The
government has paid approximately $685 million to 14,297 prevailing
Track A claimants. In addition, USDA has provided approximately $22
million in debt relief to over 1,341 prevailing claimants.
CRLD has taken the lead in ensuring that USDA meets its commitments
under the consent decree, by coordinating the production of relevant
documents, providing necessary legal analyses, and ensuring USDA's
compliance with Adjudicator and Arbitrator decisions. CRLD is working
with FSA and the DOJ to develop timely and appropriate government
responses to claims filed by eligible farmers. CRLD also plays a major
role in the appeals process, which allows petitions to a Monitor to
reevaluate claims.
Key to settlement of the Pigford action was the 1998 enactment of
the waiver of the Equal Credit Opportunity Act's statute of limitations
that allows farmers with long-standing discrimination complaints to
have their claims finally heard. CRLD and OGC field offices have
represented USDA in over 130 cases in which a hearing was requested;
the vast majority were dismissed on motions filed by OGC. With respect
to farmer discrimination claims not covered by the Pigford settlement,
CRLD works with the USDA Office of Civil Rights (CR) to ensure that all
claims receive expeditious and fair consideration, within the bounds
set by applicable law.
CRLD also coordinates USDA's defense in 4 other program class
actions in Federal District Court. These cases include 3 class actions,
Keepseagle v. Johanns, Garcia v. Johanns, and Love v. Johanns, all
originally filed by the same attorneys that initiated the Pigford
litigation. To date, the Keepseagle case is furthest along in
litigation and may be the best predictor for the outcome of the other
cases. Despite a vigorous defense, District Judge Emmet G. Sullivan
certified the Keepseagle class to include all Native American farmers
or ranchers, who (1) farmed or ranched between January 1, 1981 and
November 24, 1999; (2) applied to the USDA for participation in a
Federal program during that time period; and (3) filed a discrimination
complaint with the USDA individually or through a representative during
the time period. The Keepseagle case is proceeding through lengthy and
comprehensive discovery on the merits which has, to date, resulted in
the production of nearly 400,000 pages of documents to the Plaintiffs.
The Garcia and Love class actions were brought on behalf of
Hispanic farmers and female farmers respectively, alleging
discrimination in the administration of farm credit and disaster
benefit programs. In September 2004, the D.C. District Court denied
class certification in both cases. However, in December 2004, the U.S.
Court of Appeals, D.C. Circuit, granted Plaintiffs' petitions to file
appeals. In July 2005, the Circuit Court issued a consolidated briefing
schedule for both cases that concluded in November 2005. Oral argument
was held on February 6, 2006. On March 3, 2006, the Court of Appeals
for the D.C. Circuit affirmed the District Court's denial of class
certification in Love.
The remaining program class action is Chiang v. Johanns, filed on
behalf of all black citizens or qualified aliens who reside in the U.S.
Virgin Islands alleging discrimination in the access to and
participation in RD programs for credit, assistance, training,
educational opportunities, housing, or home ownership. The Chiang class
was certified by the District Court in the Virgin Islands and is
proceeding on the merits. In response to the government's appeal of
class certification, the Third Circuit limited the class definition to
Virgin Islanders. In September 2005, the parties participated in
mandatory mediation but were unable to resolve the litigation. The
parties are now proceeding through discovery on the merits.
CRLD provides primary litigation defense services in all employment
class actions pending before EEOC. Since August of 2000, as a result of
CRLD's vigorous defense, EEOC has dismissed over 20 class action
employment complaints for failing to meet the legal standards for class
certification.
Currently, CRLD is involved in 8 active employment class actions.
To date, CRLD is actively litigating 4 of these complaints. CRLD seeks
to resolve those matters that, upon careful review, indicate a need to
address apparent underrepresentation or policies that may have an
adverse impact on a particular group of employees. For example, CRLD
has assisted DOJ in negotiating settlements in 2 major class actions
filed by employees of the FS Region 5, Donnelly and Regional Hispanic
Working Group (RHWG)/Brionez. The Donnelly consent decree expired in
January 2006. There was a contempt hearing in RHWG/Brionez on February
10, 2006. The Court issued a brief order the next day, to be followed
by a comprehensive opinion, which extended the Settlement Agreement for
one year.
CRLD also carries a full docket of over 50 complex and politically
sensitive individual Equal Employment Opportunity (EEO) cases involving
either issues of first impression or disputes over positions at the
highest levels within USDA. CRLD litigates these cases on behalf of
USDA without the assistance of DOJ. Moreover, recent years have seen a
dramatic increase in the demand for CRLD's litigation services in a
number of formal individual EEO complaints previously defended by non-
attorney agency personnel staff. CRLD's litigation responsibilities
also have expanded as a result of several changes in the law, including
a 1999 Supreme Court decision holding that EEOC possesses the legal
authority to require Federal agencies to pay compensatory damages in
EEO cases.
In addition to its primary litigation responsibilities, CRLD
currently assists DOJ in the litigation of over 50 additional
individual civil rights cases in both the employment and program areas
pending in Federal district court. Although the Assistant U.S.
Attorneys (AUSAs) and/or DOJ attorneys serve as lead counsel, CRLD is
receiving an increasing number of requests for comprehensive litigation
support, including drafting answers, dispositive motions, discovery
responses; deposition participation; and witness preparation.
The newly created CRPCCD provides advice and counsel to agency
components on civil rights issues, including: (1) completing an
impressive number of legal sufficiency reviews and legal opinions each
year; (2) providing daily, informal legal advice to the client
agencies; and (3) providing periodic training on civil rights issues.
CRPCCD is also responsible for providing advice and assisting in the
early resolution of informal EEO matters.
In an average month, CRPCCD staff write at least 25 formal and
informal opinions in response to, or in anticipation of, inquiries on a
wide variety of civil rights topics. This advice is an essential
element in CRPCCD's proactive relationship with its client agencies.
CRPCCD anticipates that the demand for these services will only
intensify. For example, CRPCCD continues to receive an increasing
number of requests for advice on reasonable accommodation for employees
with disabilities and program accessibility for customers with
disabilities. In addition, CRPCCD receives numerous inquiries regarding
the proper interpretation and application of Executive Order 13166
requiring agencies to ensure that customers with limited English
proficiency have access to USDA programs. CRPCCD's formal policy
responsibilities are on the rise as well. CRPCCD has been working with
the Assistant Secretary for Civil Rights to develop a Departmental
Regulation on alternative dispute resolution (ADR). In addition, CRPCCD
reviews civil rights impact analyses of all major reorganizations
throughout the Department.
In recent months, CRPCCD has also received an increasing number of
requests for training presentations. CRPCCD has provided training to
numerous agencies on issues such as reprisal, ADR, and reasonable
accommodations.
FISCAL YEAR 2007 BUDGET REQUEST
For fiscal year 2007, the budget proposes a total of $40,647,000
for OGC salaries and expenses. This is an increase of $1,690,000 over
the adjusted base for fiscal year 2006. This amount includes $515,000
to maintain staffing levels and $791,000 for pay costs. This critically
important increase is needed to support and maintain current staffing
levels to meet the current and projected increased demand in delivering
predecisional legal advice, training, and litigation legal services to
agencies. Approximately 92 percent of OGC's budget is in support of
personnel compensation, which leaves no flexibility for absorbing
promotions, within-grade and pay cost increases.
An increase of $384,000 and 5 staff years is requested to support
significant workload increases in several areas of the office. Attorney
staff years are needed to assist APHIS in addressing major animal
health and food safety issues of the Department. There is a strong
demand to add an additional attorney to support the farm loan and crop
insurance programs, as well as an additional attorney to face the
challenges in the areas of contracts, procurement, and outsourcing of
Federal functions. Additional legal resources are also needed in OGC's
Kansas City office in the areas of farm and loan programs, bankruptcy,
risk management and contract law and also in OGC's San Francisco office
to handle class action EEO complaints arising out of the activities of
the FS Region 5 headquartered in Vallejo, California.
CLOSING
That concludes my statement. We very much appreciate the support
the Subcommittee has given us in the past. Thank you.
Senator Bennett. Thank you very much, Mr. Secretary.
We have been joined by Senator Burns, who has another
commitment that is going to take him out of here in about 3
minutes. So if there is no objection, I would yield my time to
Senator Burns before we turn to Senator Kohl. Then we will go
to Senator Craig, and I will come in at the end, rather than
the beginning.
Senator Burns. Did you ask Senator Kohl about that?
Senator Bennett. Well, I said if there is no objection, and
I didn't hear a grunt from him.
Senator Burns. I am not going to upstage my Ranking Member,
I will tell you that. I know where I am on the pecking order.
So I have just got a couple of comments. And Mr. Secretary,
thank you very much and all the work that you have done. And I
think you know out of this $97 billion, or whatever it is
number that we got, I was interested in how much of that money
goes out in direct payments to farmers in subsidies, and only
around $25 billion.
We do a lot of things that they said, well, you spend $97
billion on farmers. Well, we don't spend $97 billion on
farmers. There are a lot of programs that are very, very
important, and conservation being one of those and a lot of
things. And some of those dollars do make it down to
agriculture that is not counted directly to the commodity
support.
Mr. Secretary, we are still concerned about the Japanese
beef thing. I know you continue to work on that, and any good
news that you give us would be welcome. If you have got bad
news, well, we will just let that slide. But I would want some
comment on that.
And then the second question, we are having difficulties
with high energy prices, and we can't get our arm around our
production costs. Energy being one of those, both in our fuels,
in our fertilizer with natural gas being high and being the
feed stock, the fertilizer.
We see another increase coming in fertilizer. We hear our
producers are cutting back about a third of the fertilizer that
is going on the ground this year because they just can't afford
it, and that concerns me.
And your move to be a producer kind of advocate, the EPA
again over there--I wish you would have somebody to take a
look--because by changing definitions of what is happening that
the EPA changes has a huge impact on our producers, especially
in confined feeding and the way we handle chemicals and the way
we do things.
A change of definitions has a huge impact on the costs we
are having on the farm and ranch. And that appears to be
happening over there, and we have got to take note of that and
to work very closely with those groups that the impact on
agriculture and our ability to produce food and fiber of this
country is very, very important. You might want to comment on
that.
And then the third one is that with the new technologies, I
think we are going to put agriculture in the energy business.
That was the drive in 2002. It was the drive in 2005, when we
passed the energy bill because of renewables and alternative
fuels, and it seems to be working. And I think we are going to
have to have a strong title in the 2007, especially with the
advances we have made in technology, in plant residue, in the
biomass area.
We know that the production of ethanol and biodiesel is
going to be very important. So agriculture is going to be in
the energy business. And it needs to be because we need to
increase our independence away from foreign oil, and if we can
get our capacity of those alternative fuels up, we can deal
with that along.
And the other night, we were on a television show on RFD-TV
with Secretary Dorr. We continue in the rural communities, the
cornerstone to their growth is still broadband deployment and
telecommunications because we cannot compete in the national
economy or the international economy unless we can move massive
amounts of information from our smaller towns and rural
villages.
So you might want to comment on that, and the Japanese
situation, and then also the situation of working with the EPA
to make sure that these definitions don't have a high impact on
us.
BEEF EXPORTS TO JAPAN
Secretary Johanns. In reference to Japan, I can assure you
I don't have any bad news. So I can start there.
Let me also say, Senator, how much we appreciate your
tenacity relative to this issue. We can explain that to the
Japanese, but it speaks volumes when House Members and Senators
publicly explain how important this market is and the need to
have it reopened. So we appreciate that.
The report, regarding the ineligible shipment of veal to
Japan is done. We did a very thorough investigation. We even
went the extra step and invited the inspector general to take a
look at the findings in the report. There were actually two
investigation reports submitted to Japan. We have been
receiving questions from Japan. About half of those questions
are answered already. We are not taking any extra time. We are
getting those questions answered and back on their desk.
This weekend, I will have an opportunity to meet with
Minister Nakagawa, who is my equivalent in Japan. I am very
anxious to sit down with him. Our report has 475 pages. There
was a lot of work put into it and I can assure you what we
found out was that there was no attempt to hide anything here.
There was just simply confusion on both sides.
We had an e-mail trail that showed that the person making
the order from Japan was confused about what was authorized. It
is listed right there in the e-mail. And the plant was confused
also.
Now I don't offer that as an excuse, but we have a rather
complicated agreement with Japan. So I am optimistic. They are
probably going to have some additional inspection requirements.
That is not a big issue for us. We will facilitate their
requirements and get them in plants. My goal is to get this
beef market reopened again just as quickly as we can.
I don't really see any reason for extensive delay. We have
got the investigation done. We can answer their questions. We
will meet their requirements, and I think it is time to get
beef moving back to Japan again.
RENEWABLE ENERGY
In terms of renewable energy, I agree with your assessment.
I do believe that as we think about farm policy for the future,
a strong energy component for agriculture is critical. The news
is very good.
We estimate 22 percent of corn crops will be processed into
ethanol by 2010. It is currently 14 percent. So we just
continue to see dramatic increases there.
Biodiesel, soybeans to biodiesel. Again, we just continue
to see very dramatic growth in that area. There are also other
biomass products that aren't as far along. And then there are
still other areas, like wind energy to be developed.
In terms of your comments about working with the EPA, we
have got a good working relationship with them. I will pass on
to them whatever issues you have on your mind, and I would be
happy to facilitate a meeting, too, where we can sit down with
you or other members of this subcommittee and deal with those
issues.
ENERGY COSTS
Energy costs are a big issue among farmers and ranchers. We
heard about it in our Farm Bill forums. We do have some really
promising things going on out there. We designed an energy
strategy, and we have had a good response to it. It is an
online system in part, so producers can figure out how they
might save some energy costs, some nitrogen application costs,
and then I directed the USDA to do everything we can to move
money that we have available into this area of energy
assistance and provide grants and loans to try to help with
projects related to energy.
I wish I could tell you that I could bring the price of a
barrel of oil down to $35, but I probably can't. But everything
we can do at the USDA we have been doing to provide energy
assistance.
Senator Burns. If we could get a bushel of wheat to $6, you
could offset it on that end, too.
Secretary Johanns. That solves the problem, too, doesn't
it?
Senator Burns. You know, there are a lot of ways to offset
this.
I thank the Chairman for his courtesy, and thank you,
Senator Kohl. I appreciate that very much.
Senator Bennett. Senator Kohl? No, you go ahead. I will
take Senator Burns spot.
Senator Kohl. All right. Thank you, Mr. Chairman.
DAIRY POLICY
Mr. Secretary, dairy annually generates over half of
Wisconsin's cash farm receipts, and last year about $20.5
billion of economic activity in our State. So anything that
disproportionately affects dairy and cheese disproportionately
affects our entire State.
I am sure you can appreciate then my profound
disappointment that the President's budget seems to have it in
for dairy. First, it seeks a 5 percent across the board
reduction of all commodity payments to farmers. Second, it re-
proposes a statutory mechanism for adjusting the butter/powder
tilt in the dairy support program, the practical effect of
which will reduce value to producers. And third, it recommends
a 3 cent per hundredweight farmer assessment on all milk, which
would have totaled about $7 million for Wisconsin producers
last year.
Earlier this week, a bipartisan group of senators joined me
in a letter to the Senate Budget Committee urging rejection of
this attack on dairy farmers.
Now I know you do not put together the entire budget, but
does it make sense, Mr. Johanns, to you in a budget that
includes billions of dollars in tax cuts for investors that you
are being asked to fight for a tax increase on dairy farmers?
And is that really the policy that you are asking us to
support?
Secretary Johanns. I support the President's budget, as you
might expect, Senator. And that probably comes as no surprise
to anybody in this room.
But let me, if I may, just try to identify some of the
things that have stood out for me as I have worked on what is
really my first opportunity to be involved in the budget
process from start to finish.
I hear your comments about the tax decreases, and what I
would offer is that if you look at the revenue situation,
revenues actually increased for the United States. What you are
seeing is that those tax decreases, which really did apply
across the board, improve the economy.
I have worked around government budgets long enough to know
that there are number of factors that you consider in trying to
put a budget together and trying to decide what level of
taxation you should place upon your citizens. If the level of
taxation placed upon citizens is too high, you are going to
depress the economy, whether that is a State economy or a
national economy. What we saw is revenues actually increased,
and our budget people can give you specific numbers on that.
[The information follows:]
As a direct result of this strong economic growth, receipts to the
Treasury have returned to healthy growth in the past 2 years, with
increases of 5.5 percent in 2004 and an extraordinary 14.5 percent in
2005, more than 5 percentage points above the projection in last year's
Budget. Growth in corporate receipts in 2005 was an astounding 47
percent. Total receipts reached 17.5 percent of GDP, up from a low of
16.3 percent of GDP in 2004. The administration projects that receipts
will increase 6.1 percent in 2006 and an average of 5.9 percent
annually through 2011. This cautious forecast is far slower than the
14.5 percent growth experienced in 2005, but still faster than the
projected rate of economic growth.
REDUCING THE FEDERAL DEFICIT
Secretary Johanns. Now in reference to the situation
relative to dairy, what we were trying to do is figure out a
way to make these adjustments, whether it is a commodity
program or the dairy program, recognizing that we have to deal
with the Federal deficit, not in a way that picked on dairy,
but in a way that we thought was fair to commodity programs
whether you are a dairy farmer or a corn farmer or a soybean
farmer.
That is how we came up with this approach and this formula
basically implies that in every area, we are going to make some
adjustments to deal with the situation of having to reduce the
deficit.
So that is the philosophy behind it, Senator, and we may
disagree on the approach. I hope we share the same goal of
recognizing that somehow, some way we have got to deal with the
Federal deficit.
Senator Kohl. One other question, and then I will defer to
our Chairman.
COMMODITY SUPPLEMENTAL FOOD PROGRAM
Mr. Secretary, in Wisconsin alone, nearly 700 senior
citizens are being turned away from the Commodity Supplemental
Food Program this year, and well over 5,000 people are going to
lose these food packages if we eliminate the program, which is
what the budget proposes. Nationwide, the budget proposes to
stop the CSFP food packages that are being delivered to 470,000
people, most of whom are seniors.
Many seniors, estimates go as high as 25 percent
participating in CSFP, also participate in the Food Stamp
Program because their Food Stamp benefit is too low to live on.
I keep hearing about $10 a month. So, Mr. Secretary, do you
have some advice for these people?
Secretary Johanns. I have some thoughts on the CSFP
program. It is an interesting program to study, Senator, from
this standpoint. This is not a national program. It is a
program that exists only in 32 States. Two Native American
tribes, I believe, have the program also. But, it is not even
national in terms of the tribes, and I believe we also have the
program in the District of Columbia.
The other interesting thing about the program is that even
in the 32 States, it is not a statewide program. It is
literally identified for certain areas, with certain States
left out and certain parts of States that are left out. We have
included in our budget request $2 million for the transition
from CSFP to the Food Stamp Program.
It is our belief that the people that receive the benefits
of this food box will qualify for some other part of our
nutrition programs--Food Stamps, maybe even WIC. We know who
these people are. Our goal is to reach out and identify them
and get them signed up for another nutrition program that we
have.
But again, as you study this program, it is a very
interesting program. I am not arguing that people who receive
these benefits don't enjoy them, but it is a program that never
even got implemented statewide in the 32 States where it
currently operates. We believe that with the $2 million
transition money, that we can serve these people with nutrition
programs that we actually have in existence across the entire
country.
Senator Kohl. As you can imagine, I am not satisfied with
your answer, but----
Secretary Johanns. I understand.
Senator Kohl [continuing]. I appreciate that very much. And
Mr. Chairman, it is up to you.
Senator Bennett. Thank you very much.
Senator Craig. Then I will take Senator Burns slot.
Senator Craig. Okay. Thank you. Thank you for that
courtesy.
I have several questions here. I will ask some, Mr.
Chairman, and submit others for the record.
MILK INCOME LOSS CONTRACT
Senator Kohl, Mr. Secretary, expressed concern about dairy.
As you know, Congress recently passed the $1 billion 2-year
extension of the Milk Income Loss Contract, or milk program, in
the budget deficit reduction act.
The administration backed the extension of this subsidy
program during the budget reconciliation debate this past year.
Your 2007 budget seeks an assessment of 3 cents per
hundredweight on milk produced by our dairymen in order to save
$578 million over 10. Additionally, the 2007 budget seeks to
reduce milk subsidy payments to dairy producers by 5 percent
and to better manage the Dairy Price Support Program.
So the administration backed a billion dollar extension of
a discriminatory milk subsidy program. That is how my producers
in Idaho see it. By law was intended to sunset in 2005. But you
know, once you create these things, dependency hangs in there,
and we now believe it is causing overproduction.
The milk program encourages overproduction. It certainly
doesn't encourage movement with the market. So what doesn't add
up here?
Secretary Johanns. Well, in the last few months, we have
started to pay out again under the MILC program. That is a
reflection of production up, prices down. I mean, that is, in
effect, what kicks in with the MILC program when you hit a
certain price level.
We have supported the MILC program. The thought I would
offer, in terms of that extension, is that the extension tied
the program to the life of the Farm Bill and, in effect, joined
it with other commodity programs that were out there.
Next year, it is my hope that we will have a debate on farm
policy and what farm policy should look like because 2007 is
the year that we reauthorize the Farm Bill. And I believe it is
an opportunity for us to look at all of our programs and make a
decision about how best to approach them.
As I explained or offered to Senator Kohl, we have made
adjustments to the MILC program. As we looked at the need to
deal with the deficit, we did not feel that we could leave any
program out. And so, this was a way of making adjustments in
that program that we hoped, at least, would reflect the changes
that we are making in other commodity programs.
The wheat growers in the Western part of the United States,
for example, are going to get 5 percent less if the President's
budget is approved. So we basically looked at the MILC program
and said how do we make an adjustment there that at least
reflects what we are doing in the other commodity programs?
But just to summarize, Senator, the thought about the MILC
program extension was along the lines of if you extend it for
the life of the Farm Bill, you join it with the other commodity
programs in the Farm Bill, and it is in the Farm Bill, where
you decide what you want to do with the whole commodity title
and farm programs in general.
Senator Craig. Mr. Chairman, one last question. And thank
you for that answer, Mr. Secretary.
RENEWABLE ENERGY
Section 9006 of the 2002 Farm Bill provides for loans, loan
guarantees, and grants to farmers and small businesses for
projects that use renewable resources to create energy. This
provision has gotten a lot of attention in Idaho. Some of those
loans and guarantees have been provided, and it is working.
And I think we are all quite impressed with the challenges
farmers are stepping up to dealing with animal waste and crop
refuse. You heard the senator from Montana talk about a variety
of aspects of it. You have talked about biodiesel. Cellulose
ethanol is something that is being looked at now. The President
has spoken to it in his State of the Union.
Even though this program is a win-win for agriculture, the
environment, and the production of energy at a time when energy
production is not adequate--and we all really do believe that a
decade from now or two or three, American agriculture is going
to be a sizable producer of energy for our country--why did you
cut that budget? It was small to begin with. You cut it from
$23 million to $10 million. It just doesn't seem to fit the
arguments you have placed before this committee.
Secretary Johanns. Senator, let me, if I could, quickly
walk you through what we have for renewable energy in the
budget. The 2007 budget provides funding to support about $35
million for guaranteed renewable energy loans. The estimate for
2006 is $177 million in loans. However, it is unlikely that
that amount will be made.
The 2007 budget provides nearly $8 million to award grants
for use on renewable energy. This funding is about $3 million
less, and we acknowledge that. However, the 2007 budget
provides about a billion dollars in guaranteed loans under the
Rural Business-Cooperative Service's business and industry
program. This program can be used for financing renewable
energy projects.
So when you pull together the constellation of authority we
have to assist through loans, guaranteed loans, and grants, it
is a substantial, renewable energy package that we submitted to
Congress.
Also, when I was governor of Nebraska, I was the vice chair
of the Governor's Ethanol Coalition, and I was the chairman of
the Governor's Ethanol Coalition following Governor Tom Vilsack
from Iowa. One of the things that I talked about during that
period of time was that the standard of success in renewable
energy is when it becomes economically self-sufficient, and we
should celebrate that day.
Now there is probably a debate about whether we are far
enough along here. But I will tell you that in the ethanol
industry, corn to ethanol, it has been a remarkable 12 to 24
months. I mean truly remarkable.
As a governor, I worked on financing for a number of
ethanol plants, and we just never would have predicted the
return on investment that I think you are seeing in some of
these areas. Every plant is different. Every area is different.
But the goal should be that we work toward energy production or
we work toward economic independence in these projects. In some
areas, like I said, it has been a remarkable few years.
When you put all of that together, and you identify and
pull together the constellation of what we have available, we
think we can do some very, very exciting things in the
renewable energy area, and we look forward to working with your
staff and with you, sir, to make that happen.
Senator Craig. Well, thank you very much. I think you
recognize as well as I because you have obviously worked in
that field at a time when it was almost considered an
experimental start-up industry.
One of the great difficulties we have in agriculture
today--or anywhere, but especially agriculture--is when a new
technology comes along, trying to put some capital behind it,
to get it out on the ground and working so that from there
grows changes and evolutions that make it increasingly more
efficient.
Frankly, if Government hadn't come along and subsidized
ethanol when it did, we would not be where we are. And as a
result of that, while I am not too excited about subsidies, it
appears that is one that is probably going to work. It is on
its own now, and you are right. It is all but standing alone,
and it gets increasingly efficient and more productive and,
therefore, profitable.
Thank you.
Secretary Johanns. The energy policies of Congress worked.
Let me just be very clear about that. Sometimes I think we
wonder, is this going to make a difference? This made a huge
difference.
What you are now seeing across the country is that Wall
Street has discovered rural America.
Senator Craig. Yes.
Secretary Johanns. There is big debate about that. But
quite honestly, Wall Street is beginning to realize this is a
sound investment. But I will submit that through the efforts of
the President and Congress, that is what led the way.
Senator Craig. Thank you.
Thank you, Mr. Chairman.
Senator Bennett. Thank you.
AVIAN INFLUENZA
Mr. Secretary, in your opening statement, you talked about
avian flu. I would like to focus on that just a little more
because I think that is one of the things that people who are
watching are concerned about.
In your opinion, how prepared is the United States
agriculture for an avian flu outbreak?
Secretary Johanns. My opinion, I believe we are well
prepared. I say that for a number of reasons. One is that the
funding, which Congress approved, which the President sought,
is there, and that is helping us do a lot of really good
things.
But the other thing that I will share with you from our
standpoint at the USDA, first of all, it is important to remind
everyone that low path avian influenza is nothing new to the
United States. It has been here 100 years. Birds have a flu
season much like humans do. They pass through it every year.
Typically, you don't even notice it.
High path avian influenza, we have dealt with that, in
fact, on three occasions. The most recent occasion was in 2004.
We have a plan in place. We have surveillance in place. We
have testing in place. As we have worked to expand testing
capabilities, I can now tell you that we have those
capabilities in 32 States, with 39 labs approved for AI
testing. So we can identify where AI is domestically.
But we feel ready. The other thing I will mention to you,
is that we are not taking anything for granted. The President
has led a Government-wide effort in AI. And more specifically
at USDA, just within the last week, we have tabletopped our
response to identify any areas where we see weaknesses. We are
preparing like avian influenza is going to be here.
Senator Bennett. Have you used the $91 million in the
supplemental?
Secretary Johanns. Yes, we are using those funds in a
number of ways. One is we are assisting overseas. When foreign
governments ask for technical assistance, part of that money
helps us do that. We send people out to offer technical
assistance. We work with our international partners.
As you might expect, some countries are better prepared
than others. It is just simply a case where some countries
don't have the infrastructure or the resources to be very well
prepared. That is not true in other countries. So it is a
little bit of a mixed bag.
We are also using that money for additional surveillance
and research to enhance our capability to respond to avian
influenza. We can give you a very detailed summary of how the
money is being allocated.
[The information follows:]
Planned Use of Pandemic Influenza Funds
With $71.5 million appropriated to it and an additional $8.8
million from the Office of the Secretary, APHIS plans to devote funds
to both international and domestic efforts. These include:
--$17.8 million for overseas in-country technical training and
veterinary capacity building;
--$16.4 million for domestic wildlife surveillance in migratory
flyways and wildfowl;
--$26.8 million for domestic surveillance and diagnostics (e.g.,
State cooperative agreements for surveillance in live bird
markets, upland game and waterfowl, commercial poultry
operations; laboratory support; anti-smuggling efforts;
training; outreach; other activities);
--$19.3 million for domestic emergency preparedness (e.g., supplies
and animal vaccines for the National Veterinary Stockpile
(NVS); development of scenario models to direct efficient NVS
acquisitions; preparedness training for State Incident
Management Teams and the Veterinary Reserve Corps; related
efforts).
With $7 million appropriated to it, ARS plans to conduct research
as follows:
--$3 million for improved vaccines and mass immunization in domestic
and wild birds;
--$1 million for environmental surveillance methodology of avian
influenza (AI) in commercial and wild birds;
--$2 million for complete genome sequencing of outbreak AI viruses;
and,
--$1 million for biosecurity against virus transmission between and
within farms.
With $1.5 million appropriated to it, CSREES plans to conduct
expanded AI surveillance in the Pacific flyway and associated
activities.
The following funds from the Office of the Secretary will be used
for other needs:
--$1.8 million for FAS to support the FAO, provide complementary
overseas foreign surveillance, diagnostic, and other support;
--$0.5 million for the Office of Communications to develop a variety
of brochures, posters, videos, and for other initiatives to
effectively communicate with the public;
--$0.2 million for FSIS to develop a highly pathogenic AI module for
its Non-routine Incident Management System to enable the agency
to respond to an AI detection effectively and in a timely
manner; and,
--$0.1 million for Departmental Administration to revise its
Continuity of Operations Plan to help ensure the Department
maintains essential functions and services in the event of
significant and sustained absenteeism.
Secretary Johanns. So we have identified the key areas, and
we have allocated those funds in a way that will boost our
response in those areas.
Senator Bennett. Very good. This is a nitpick, but it is
the kind of thing that people pick up. I will use the
inflammatory language, and then let you get to the more
specifics. But this is the kind of thing that makes for
headlines.
CENTRAL ADMINISTRATION FUNDING
You have cut discretionary funding for rural development by
13 percent. You have cut conservation by 20 percent. You cut
research by 14 percent. But the spending for central
administration has gone up by 12 percent. Now when I look at
the chart with all of that on it, I realize that that is the
smallest base. So adding $63 million to central administration
is, percentage wise, a pretty big jump.
But I hope you can explain to the committee why you need to
go up in central administration and how the taxpayer is going
to get a return for that over the long term in view of the
other cuts that you have recommended?
Secretary Johanns. Mr. Chairman, that is a really excellent
question, and I must admit I did not analyze the individual
areas that way in terms of central administration.
Senator Bennett. Neither did I, but I have a very eagle-
eyed staff.
Secretary Johanns. And I have got a very eagle-eyed budget
director, and I am going to let him offer a few thoughts on why
you are seeing that impact.
Mr. Steele. Thank you, Mr. Secretary.
Mr. Chairman, we have included in our budget pay costs for
all of our agencies, according to what the President is going
to request. I think it is a 2.2 percent increase in pay costs
across the board for all agencies.
The other area in administrative costs that we are dealing
with is IT expenditures. Throughout the Department of
Agriculture, we have a number of systems in the Department that
need enhanced funding. We really appreciate the funding that
the Committee has provided us in the past to help modernize
these systems. But there is still a large number of systems
that we are asking for increased funding to get them up to
standard.
One of these areas is in the Farm Service Agency. The
Common Computing Environment (CCE) has received substantial
funding, but there are a lot of legacy systems that we have out
in the field that utilize old software systems. We need to
update those and migrate them onto this new Common Computing
Environment so we can all use them efficiently.
Throughout the department, we can give other examples of
those kinds of issues. We also have some issues in the
financial area. We have to start looking at our foundation
financial systems that we have. Some of those are outdated, and
we have some money requested in the budget to start looking at
ways of upgrading these financial systems and other operating
systems.
Some of these IT systems were put in place in the 1980s and
1990s, and you have to refresh them every so often to get them
up to standard. And there are a number of requests for those
types of systems throughout the budget as well.
Senator Bennett. Give me an example of a financial system.
Mr. Steele. Well, we have a central accounting system
called the Foundation Financial Information System (FFIS).
Senator Bennett. Are we talking about Food Stamps, WIC?
Mr. Steele. I wouldn't say that. It is more of a
Department-wide accounting system, that we use through the
National Finance Center in New Orleans. This is where our
agencies do procurement and other kinds of financial
transactions and where accounting records are maintained.
Some of those systems were put in place in the 1990s, and
now we have new Government-wide standards that the OMB has put
in place to achieve certain accountability in those accounting
systems. Our Chief Financial Officer now is investigating ways
of upgrading our financial systems so that they are up to the
Government-wide standard.
Now we are making progress, but we need to augment our
funding. There is a request in the budget--I think $14 million
or $15 million--to look into developing a better financial
system at the Department.
Senator Bennett. All right. Senator Dorgan.
Senator Dorgan. Mr. Chairman, thank you very much.
Mr. Secretary, welcome.
Secretary Johanns. Thank you.
WEATHER-RELATED DISASTER ASSISTANCE
Senator Dorgan. Mr. Secretary, last November or December,
when we finished the emergency supplemental, I was one of the
conferees. And I offered to the Senate conferees a $1.2 billion
disaster aid package, which the Senate conferees accepted. The
House conferees rejected it, and so we did not accomplish a
disaster aid package.
You, in your statement, said that USDA has made available
$2.8 billion to assist those impacted by the hurricanes of
which $1.2 billion will be made available to agricultural
producers through various programs and so on. I fully support
all of that, and a hurricane is devastating to the agricultural
producers of that region.
One community received one-third of its annual rainfall in
24 hours in the northern part of North Dakota last year, and we
had a million acres that couldn't be planted. I was up there
recently, and the question they asked is why could there not be
some sort of disaster program for the weather-related disaster
that occurred there? Illinois has its third-driest year last
year since 1895.
So the question is, we came close to getting it in the
conference. We did not get it because I was told that the House
conferees, at the request of the Speaker, rejected it because
the administration did not support it.
What is the administration's position--because we will
attempt to do this again on the next supplemental, emergency
supplemental. What is the administration's position on a
disaster package for farmers and ranchers outside of the Gulf
Coast who suffered a weather-related disaster?
Secretary Johanns. I would offer a couple of thoughts, if I
could, on that issue. This first thing we would have to see is
what is being proposed in the bill. But historically, as you
know, pre-dating me, when disaster bills have come forward, the
administration has taken a position of providing offsets.
And as I understand the policy behind that, when the Farm
Bill was created in 2002 and debate was occurring on what was
going to be the allocation of funding into that Farm Bill, I
think there was a look to the history of direct payments made
to farmers. And the allocation was based upon not only
emergency disaster payments that had been made, but in
addition, some other ad hoc supplemental assistance payments.
That is what has led to the issue of offsets. If there is
going to be a disaster program, it has to be found within the
budget of the Farm Bill.
A couple of other things I would offer. In 2000, there was
a very major reform of crop insurance. Interestingly enough, as
we conducted our Farm Bill forums, we did hear from farmers
that they thought as we went to work on another Farm Bill,
there should be some effort put into crop insurance and how
that process is working.
And then the other thing I would mention, and again,
interestingly enough--and Keith Collins can probably offer some
thoughts on this--FCIC has actually paid out more in the
Northern Plains for prevented planting than we have paid out
for hurricane assistance. So those are some thoughts.
When there is a bill that asks for disaster assistance, of
course, we will look at it. But I can tell you historically at
least that has been the position of the administration that
offsets in the Farm Bill would have to be sought to support
disaster assistance payments.
Senator Dorgan. And Mr. Secretary, you would understand
producers in one part of the country that suffer a weather-
related disaster, lose their entire crop, they would probably
look at this and say, well, I don't understand the difference
in we provide disaster aid in one part without an offset, but
you say in order to provide disaster aid in another part, even
to consider whether you would support it, you have to have an
offset.
I am sure you understand how producers would look at that
and say that really probably isn't fair. But at any rate, we
will grapple with that because we don't have a disaster piece
in the Farm Bill that we now have. We have got to do that year
by year, and the Congress has actually, in most cases, stepped
up. Last year, it did not.
FSA STAFFING LEVELS
I would like to ask also about the staffing at the Farm
Services Agency. The other thing I keep hearing in North Dakota
from farmers and producers is that our county FSA offices we
are losing a fourth of the people or 10 percent or 30 percent
of the people in certain offices and they are not replaced. And
it is interesting. Farmers are the ones that are coming,
complaining, saying you need to have adequate staffing in these
offices.
What is the recommendation from the USDA on staffing for
the Farm Service offices, the FSA offices?
Secretary Johanns. We have a specific recommendation. The
2007 budget provides resources to maintain permanent, non-
Federal county staff levels at about 8,775 staff-years, which
is about the same as the estimated 2006 level. The temporary,
non-Federal county staff-years will remain at the 2006 level of
650 staff-years.
These levels reflect reductions made in early 2006 in
response to the tobacco program budget. So there has been some
shifting there.
Scott, do you have anything more specific to offer on that?
Mr. Steele. Well, there have been some changes in staffing
in the Farm Service Agency due to changes in temporary
employment. Every time you institute a new Farm Bill, you bring
in a lot of temporary employees to implement the Farm Bill. And
then as the workload tapers off, when you get the systems in
place and get the payment structure set up, you find that you
may not need as many temporary employees.
We still are maintaining temporary employees but at a
reduced level. We are also trying to maintain permanent, full-
time staff at a modestly reduced level. There is no dramatic
reduction here across the country in FSA staffing, but there
could be some local areas where there could be some staffing
shortages.
There are a lot of small offices in FSA. I don't know the
exact number, but there are a number of offices that have three
or fewer people. We have situations where there are some
offices where people retire, and they haven't been replaced.
There has been some discussion that maybe there should be some
consolidation of these small offices.
Now we are working with the Congress dealing with how to go
about consolidating offices, and there is report language in
last year's appropriations bill as to how USDA should go about
determining what the staffing should be and how offices should
be handled in these various localities. We are working through
these issues now with Committee staff and staff in your
offices.
Senator Dorgan. I am going to send you some questions about
that.
BEEF EXPORTS TO JAPAN
Mr. Chairman, if I might make one additional comment? A few
moments ago, about an hour ago, the administration released the
last month's trade deficit numbers. It was the highest in
history, $68.5 billion for the most recent month, which, of
course, is a complete disaster for our country. And both the
President and the Congress have had their head in the sand on
trade for a long while.
On the issue of trade with Japan, because one Canadian cow
found in the United States with BSE occurred, Japan has shut
off, then started, then shut off again beef shipments to Japan.
Obviously, you are working to try to open that market, and
my own feeling is that if Japan doesn't open their market, they
should ship all their goods to Kenya and see how quick they get
rid of their exports. But I just want to say that when that
market is open--let us say it is fully open tomorrow--not many
know it, but 15 or 17 years after the beef agreement with
Japan, every pound of beef that we do get into Japan will have
a 50 percent tariff attached to it.
At the end of the beef agreement, you would have thought
both sides won the Olympics back in the late 1980s because they
celebrated and thought it was wonderful, what a great agreement
this is. Almost 17 years after the agreement, there would
remain a 50 percent tariff because they have tariff reductions
with a snapback on increased quantity.
It is unbelievable to me that even if you get that back
open--and it should be open tomorrow, the beef market in Japan
for U.S. beef--even if it is reopened, there will remain a 50
percent tariff on every pound of beef going to Japan. That is a
colossal failure.
And I simply wanted to mention one more demonstration that
in the area of trade, all kinds of trade, our country lacks
backbone and will to say to other countries, we insist on
reciprocal treatment and fair treatment. It is not fair 17
years after a beef agreement that they would continue to impose
a 50 percent tariff.
Now that is not the most important thing. The most
important thing at the moment is prying open that market. I
know you are working on that. I know the administration is
working on it. I think it is unbelievable the trade deficit we
have with Japan. Last year, I believe close to $70 billion or
over $70 billion.
And because one Canadian cow was found in the State of
Washington with BSE, Japan has shut its market to U.S.
producers. It is unbelievable to me. So keep working, and you
can't be tough enough for my tastes. Whatever you do, the
tougher you get, the more I will support it.
Secretary Johanns. Thank you. I appreciate that. Thank you.
Senator Bennett. Senator Bond.
Senator Bond. Thank you very much, Mr. Chairman. And
welcome, Mr. Secretary.
Following up on the comments by colleague from the Dakotas,
foreign trade is extremely important. And in agriculture, our
surplus has been as high as $30 billion that our exporters can
generate from exporting farm goods.
And your budget officer talked about the need for 21st
century IT for the central administration of USDA, and that
sounds good. But farmers in the Midwest are telling me they
need 21st century transportation if they are to get their goods
to the world market.
MISSISSIPPI RIVER TRANSPORTATION INFRASTRUCTURE
And on the issue of having a competitive Mississippi River
transportation and the Illinois system that serves the 21st
century, as our 75-year-old system has served the previous
century, I understand from news reports that you have
reconfirmed that the administration does not oppose modernizing
our aging locks on the Mississippi and Illinois Rivers. Is that
correct?
Secretary Johanns. Correct.
Senator Bond. Thank you.
Deputy Secretary Conner, I was very much encouraged by the
comments you made in response to questions from my colleague
Jim Talent in your confirmation hearing when you said
Mississippi River commerce is absolutely essential and that we
would be absolutely dead in the water without it and that you
would be an advocate within the administration in helping that
reality become understood.
Does that remain your point of view?
Mr. Conner. Absolutely, Senator.
Senator Bond. Haven't lost any of your enthusiasm for it?
Mr. Conner. No. No, those were not statements made as a
result of my confirmation. We continue to believe strongly in
those, Senator Bond.
I don't think you need to look any further than the impact
that Hurricane Katrina had on grain prices in the Midwest
during that short period of time when the ports were closed to
know just how essential this river transportation is to our
farmers in the Midwest.
Senator Bond. I was pleased that I even saw some mention in
the national media that there was something coming down the
river going through the port of New Orleans called grain. And
this may have been the first recognition by the national media
that we do export grain, and that it is very important for our
rural economies and as well as our balance of trade.
GRAIN EXPORTS FORECASTING
Dr. Collins, it is good to see you again. I remember very
well, I believe it was 2 years ago, you told this subcommittee
when asked about the requirement that the Corps come up with a
50-year projection, you said that you could make a 10-year
projection that our exports in corn are projected to rise about
45 percent with about 70 percent of that expected to go out
through the Gulf. And by extension, that means significantly
down the Mississippi and Illinois Rivers.
When I asked you why you didn't try to make a 50-year, 5-0,
forecast as some people had charged the Corps of Engineers for
doing, I believe you said that doing it for 10 is heroic
enough. Is that a fair representation, and would you like to
explain that?
Mr. Collins. Senator Bond, I would still stand by that last
comment. I think that 50-year projections are highly
speculative. Our own 10-year projections, which we do every
year to support the estimates in the President's budget, are
also speculative.
Nevertheless, those projections do show that, over time, we
would expect to increase our grain exports, particularly our
corn exports. However, the increase is not quite as high in our
current set of forecasts, as you just mentioned. Nevertheless,
it is still a substantial increase over the next decade.
One of the reasons we lowered it was because of the
increase in corn use for ethanol, which might compete a little
bit in the export market. But even so, we show a strong
increase in corn exports expected over the next decade. And we
expect that roughly three quarters of those exports would move
down the Mississippi River.
Senator Bond. And they are trying to go beyond that with
all of the variables, not only uses, but exchange rates.
Perhaps even transportation. That becomes beyond the realm of
the realistic?
Mr. Collins. It is beyond what we normally try to forecast.
Nevertheless, you can look out over the next 20, 30, 40, 50
years, and you can look at the economic growth that is
occurring in the world. The increase in incomes in developing
countries, higher income developing countries, and we know they
are going to change their diets. We know they are going to move
more toward meat, and they are going to be demanding feed
grains and oil seeds to grow livestock and poultry products.
So we do think there is a good long-term market for grains
and oil seeds in the world, and we think that the United States
can compete successfully in that market. And I think having
efficient infrastructure will help make that possible.
Senator Bond. Thank you, Doctor. That is very important,
and I certainly appreciate it.
And I would ask Secretary Johanns' picture of some of the
jammed up barges, on maybe even bringing some grain across from
Nebraska to try to go into the world market. Do you agree that
the system built 75 years ago with a 50-year projected life
span that moves 80 million tons of commerce annually and two
thirds of our exported grain has proved to be an important and
wise investment?
Secretary Johanns. Yes.
Senator Bond. It is interesting that sometimes people are
nay-sayers, and I would like to introduce you to a person,
unfortunately, a dedicated man, well intentioned, bright,
honorable. This is Major Charles L. Hall, the Rock Island
engineer from 1927 to 1930.
He advised President Hoover at the time that the proposed
system that currently exists, that we have now, was not
economically feasible. He argued that limited barge traffic did
not indicate that a viable barge industry would develop.
Fortunately, President Hoover and the Congress ignored the
advice, and President Hoover said modernization would put the
Nation's rivers back as great arteries of commerce after half a
century of paralysis.
Now I suspect that Major Hall may have some grandchildren
or great-grandchildren working dutifully over at OMB.
Senator Bond. But I ask that you let not just a positive
vision of the future, but this history help inform you, the
internal discussion on whether we should be trying to predict
the future or shape the future, whether we want to compete or
surrender.
And I was very much encouraged by Dr. Collins's comments,
and I think that shows that if we are willing to build the
future, if we are willing to provide the infrastructure, we can
and will see it grow. If we say, hey, the 75-year-old system is
good enough, it is going to break down, and so are our exports.
And I know that you are reluctant, Mr. Secretary, to
comment in public about other agencies' budgets. But I think we
all understand that there is absolutely no voice, nobody
speaking up for agriculture at DOD, at CEQ, or at the Office of
Management and Budget.
At DOD, wonderful folks to work with, but they are afraid
that they are going to get beaten down if they try to step out
of line. If you and your colleagues, well-informed at the
United States Department of Agriculture, don't fight for
agriculture, agriculture will be without a voice.
And I join with my colleagues in saying that voice not only
needs to be for efficient, effective transportation, it needs
to be for new technology, and we need to continue to develop
the biotechnology and the other things that are significant.
And we need to continue to fight to make sure that
agriculture has a seat and a prominent place in lowering tariff
barriers so that we can realize the potential of American
agriculture in feeding the hungry of the world and assuring not
only solid rural communities, but good incomes for farmers.
Secretary Johanns. Thank you.
Senator Bond. Thank you very much. Thank you, Mr. Chairman,
Mr. Secretary.
ADDITIONAL COMMITTEE QUESTIONS
Senator Bennett. Thank you very much, Senator Bond.
With the eye on the clock and the recognition that the full
committee is meeting, we will submit additional questions to
you, Mr. Secretary, in writing. And as I said in the opening
statement, I hope that all Senators have those questions to the
subcommittee staff by Friday, March 17.
[The following questions were not asked at the hearing, but
were submitted to the Department for response subsequent to the
hearing:]
Questions Submitted by Senator Robert F. Bennett
USDA SHARE OF BUDGET CUTS
Question. Congressional Quarterly analyzed the administration's
budget request by appropriations subcommittee. The analysis shows that
overall discretionary funding for this subcommittee, as proposed by the
administration, is down 7 percent. Since the budget for the Food and
Drug Administration is up 5 percent, we know all of the cuts come from
the budget of USDA. No other department has taken such a large
decrease.
Why has USDA taken such a disproportionate share of the cuts to the
non-defense, non-homeland security, portion of the discretionary
budget?
Answer. The President's budget for 2007 continues to support the
priorities of the United States Department of Agriculture (USDA). USDA
is committed to the President's plans to reduce the deficit which will
strengthen the economy and create jobs.
The reduction in USDA discretionary funding is largely the result
of the following changes. First, the budget does not propose
continuation of the one-time supplemental funding provided in 2006.
Second, funding for selected programs, including earmarked research
grants and watershed projects, is reduced or eliminated in the budget.
Further, certain one-time funding, such as construction projects, is
not continued in the budget. These reductions allow us to propose
increases in high priority areas, including food and agriculture
defense, avian influenza and food safety.
LEGISLATIVE PROPOSALS IN THE BUDGET
Question. Historically, the Congress has not enacted new user fees
for the Food Safety and Inspection Service. The 2007 budget request
includes a legislative proposal that would generate an additional $105
million.
If the Congress does not agree to new user fee proposals, how do
you propose we make up the difference?
Answer. In 2007, the President's budget includes and requests the
full amount of budget authority needed to operate FSIS' inspection
services. We are requesting authority to charge user fees, deposit the
fees into special receipt accounts, and use the fees subject to
appropriations. We fully support the fee proposal as presented in the
budget, which will shift the responsibility for funding these programs
to those who most directly benefit.
Question. Will you submit a budget amendment?
Answer. No, the President's current budget includes and requests
the full amount of budget authority needed to operate FSIS' inspection
services.
Question. Have you submitted the text of your legislative
proposals?
Answer. The proposal is currently being finalized and will be sent
to Congress shortly.
WIC LEGISLATIVE PROPOSAL
Question. In addition, the budget proposes another legislative
proposal to limit nutrition services and administration grants in the
Women, Infants, and Children (WIC) program, which reduces the program
by $152 million.
If the Congress does not agree to this proposal, how do you propose
we make up the difference? Will you submit a budget amendment?
Answer. The WIC Program will continue to serve as many eligible
persons as possible with the funding level provided by the Congress,
including use of the $125 million contingency fund as needed. We do not
plan to submit a budget amendment.
ANIMAL IDENTIFICATION
Question. Mr. Secretary, the Congress has provided over $66 million
for the implementation of an animal identification system. This level
of funding does not include an additional $18.7 million that was
transferred from the Commodity Credit Corporation. With that in mind,
the budget request for fiscal year 2007 proposes another $33 million to
continue this animal identification exercise.
Please provide us with an update on the status of animal
identification and when you expect a national program to be fully
implemented.
Answer. Premises registration has been implemented in all 50 States
and 2 Territories. Several Tribes are also registering their premises.
The animal identification phase, in which APHIS will begin allocating
animal identification numbers, is being implemented in March 2006. We
anticipate the remaining systems elements will be operational in early
2007, but private entities will need to supply information to fill the
private databases.
Question. To be more specific, infrastructure items such as ear
tags, scanners, and private databases must be available for such a
program to operate. Who will fund this infrastructure, the private
sector or USDA?
Answer. USDA will continue to provide funding to the States to
carry out their responsibilities at the local level. In addition, USDA
will continue to support the premises registration and animal
identification numbering systems, the data system necessary to support
and integrate multiple data systems held by private industry and State
sectors, and public outreach and education efforts. The private sector
will be assuming costs associated with scanners, private databases, and
animal identification devices.
office of the under secretary for marketing and regulatory programs
Question. Mr. Secretary, the Under Secretary position for Marketing
and Regulatory programs is currently vacant. This position is one that
is very significant based on current issues that the Department of
Agriculture continues to monitor. For instance, this office provides
oversight and management of Department actions related to avian
influenza, pest eradication programs, marketing and grading of
commodities, and animal disease surveillance. Please provide us with an
update on this Under Secretary position. Also, how long do you expect
this position to be vacant?
Answer. I appointed Dr. Charles ``Chuck'' Lambert as the Acting
Under Secretary for Marketing and Regulatory Programs on November 14,
2005. Dr. Lambert served as Deputy Under Secretary for Marketing and
Regulatory Programs since December 2, 2002. I anticipate that the
President will nominate someone for this position in the very near
future.
FARM SERVICE AGENCY (FSA)--COUNTY OFFICE REALIGNMENT
Question. Mr. Secretary, the Farm Service Agency continues to
review the current county office structure to determine how to better
manage the agency's day-to-day operations. Any action taken by the
agency will most likely include a number of office closures and
relocation of current employees.
Please provide us with an update of the current review process.
Also, please take a moment to explain how altering the current office
structure will impact productivity and customer service.
Answer. Consistent with Congressional guidance provided in the 2006
Appropriations Act, I have asked FSA's State Executive Directors (SED)
to conduct independent reviews of the efficiency and effectiveness of
FSA offices in their States. The SED and State committees will form
review committees to identify what the optimum network of FSA
facilities, staffing, training, and technology should be in each State
within existing budgetary resources and staffing ceilings. Consistent
with guidelines set out by Congress, the agency will notify
Congressional delegations and conduct public hearings on proposals for
closure or consolidation. There are no targets for office
consolidations specified at the national level, but as you well know
there is an urgent need to optimize the network of offices given the
current number of inefficient offices.
We are encouraging the SED to explore joint opportunities with the
Natural Resources Conservation Service (NRCS) and other agencies
utilizing the State Food and Agriculture Councils. The agencies are
being asked to work cooperatively in this effort.
We are committed to a continued dialogue with State and
Congressional leaders to discuss how best to modernize the FSA county
office system and the necessary steps required to improve its
information technology (IT) infrastructure. As you know this budget
contains a request for funding to develop a modern, web-based, program
delivery IT infrastructure called MIDAS. The ultimate goal of the
modernization/office consolidation process is to increase the
effectiveness of FSA's local offices by upgrading equipment, investing
in technology and providing personnel with critical training. IT
modernization along with office consolidation is absolutely essential
to ensure that America's farmers and ranchers continue to receive
excellent service long into the future.
CLASSICAL CHINESE GARDEN
Question. Mr. Secretary, your budget requests approximately $8.4
million for the construction of a Classical Chinese Garden at the
National Arboretum. I understand this is a joint project between China
and the United States. In previous years, the Congress was unable to
fully fund the administration's request in a number of priority
research programs such as the National Research Initiative (NRI), food
safety, nutrition, obesity, and emerging plant and animal diseases. It
is almost certain that we will not be able to fund all of your
priorities again this year. What is the Classical Chinese Garden's
priority with respect to these other research objectives? Answer.
Although the construction of the Classical Chinese Garden is a joint
project between China and the United States, it is essentially a gift
from China to the United States. The Chinese will provide all the
structures, rockeries, plants, furniture and art objects which are
valued at over $50 million. The $8.4 million requested in the fiscal
year 2007 budget is for infrastructure preparation including,
excavation of the lakes, and building a story palace for the Garden.
The Department has ranked this project as the highest priority facility
project for ARS in the fiscal year 2007 budget.
NATIONAL FINANCE CENTER--STATUS
Question. USDA's National Finance Center (NFC), located in New
Orleans, operates a centralized payroll, personnel, administrative
payment, and central accounting system that serves more than 40
departments, independent agencies, and congressional entities. NFC
employs more than 1,400 staff in New Orleans to carry out this mission.
Because of the devastation Hurricane Katrina wrought on the New Orleans
area, NFC was forced to evacuate and initiate its Continuity of
Operations Plan. NFC was not able to return to its New Orleans office
for several months.
The Hurricane supplemental that was passed in December provided $35
million to support temporary space for NFC employees, equipment, and
refurbishment of the New Orleans office. The most recent supplemental
request seeks an additional $25 million for continued support of
recovery efforts at the National Finance Center.
Can you provide us with an update on the status of the National
Finance Center and explain how these funds are being used?
Answer. With the help of the $35 million appropriated to the
Department, the National Finance Center is returning to normal
operating conditions utilizing its New Orleans facility. Service levels
to client agencies are continuing to improve. The staff remains
committed to the continued uninterrupted delivery of services for
financial reporting and human resource and payroll clients. The
National Finance Center pays approximately 565,000 civilian Federal
employees in over 140 Federal agencies, provides human resource
services for several USDA, DHS, and other agencies, and host the
financial management system for USDA.
The National Finance Center and activities collocated with the
Center incurred expenses for redeployment of personnel, for equipment
and related technology to resume business operations as quickly as
possible, for rental payments and contract costs associated with
administering the emergency facility and for housing for personnel, and
for emergency overtime for personnel working toward establishing
operations. We are continuing to utilize and operate an interim
computing facility in Philadelphia with a small on-site staff; all
other employees are now operating out of the New Orleans facility.
The additional $25,000,000 in supplemental funds represents funding
to support recovery and continuity of operations efforts during the
``deployment'' and to continue supporting the operation of the interim
computing facility in Philadelphia. Specifically, supplemental funds
are to be applied in the following areas:
--Extraordinary Personnel and Related Expenses.--Covers overtime and
employee travel between New Orleans and the various alternate
worksites. Additionally, provides continuing coverage of
overtime and employee travel for staffing of the interim
computing facility.
--Rental Charges.--Covers the residential rental expenditures
incurred for deployed employees.
--Contracts.--Covers various contracts in support of the operation of
the interim computing facility, backup facilities and the
alternate worksites. Also includes space rental of the various
alternate worksites.
--Temporary Labor.--Covers the additional costs incurred to
temporarily replace expertise lost due to the dislocation and/
or loss of employees.
--Other Services.--Covers essential support costs incurred and future
costs needed to replace, refurbish, or rehabilitate facilities
at the New Orleans site and the interim/backup computing
facilities. This includes hardware leases and software licenses
for the interim computing facility, replacement of destroyed
furniture, office equipment, telecommunications infrastructure
and support, and supplies.
--Temporary Facilities.--NFC expects to be done with temporary
buildings by early summer.
NATIONAL FINANCE CENTER--DATA CENTER OPERATIONS
Question. I understand that under the Continuity of Operations Plan
the NFC's data center, meaning the main computer servers and equipment,
was moved to a temporary site in Philadelphia. Six months after
Hurricane Katrina, NFC's data center is still located in this temporary
space.
Can you provide us with an update on USDA's efforts to find a
permanent site for NFC's data center?
Answer. On February 8, 2006, the USDA sent out a facility
requirements package to Department of Defense organizations and the
General Service Administration requesting information on existing
Federal facilities that could satisfy NFC's requirements. This package
included a copy of NFC's current facility requirements (i.e. floor
space, power, pricing, security, etc.). As of March 21, 2006,
information on 17 available facilities has been received. NFC is
currently evaluating those responses to determine the best
alternatives. Once the best alternatives are determined, NFC will
conduct visits to those sites to complete the assessment process. NFC
is working to complete the assessment and site selection process as
quickly as possible. This effort should be completed this spring.
Question. Can the NFC use USDA's National Information Technology
Center in Kansas City as a permanent site?
Answer. NFC explored the possible use of USDA's National
Information Technology Center (NITC) in Kansas City as a permanent
site. However, it was determined that the pressing program needs of the
Department at the Kansas City site would have resulted in
implementation and operational costs that were incompatible with the
current rate structure employed with NFC customers. On February 8,
2006, the USDA sent out a facility requirements package to Department
of Defense organizations and the General Service Administration
requesting information on other existing Federal facilities that could
satisfy NFC's requirements. Once responses are received and assessment
and comparison of all acceptable alternatives are completed, a decision
of where to locate NFC's permanent site will be made.
515 HOUSING PROGRAM
Question. Mr. Secretary, the fiscal year 2007 budget request
eliminates funding for the 515 Rural Rental Housing Program. The 515
housing program provides funding for construction and revitalization of
affordable rental housing for rural families who have very low to
moderate incomes.
If the Congress does not provide funding for the 515 housing
program, will low income citizens have any other option when it comes
to affordable housing?
Answer. We stress that the Section 538 program, like the 515
program, provides housing for very low income citizens. The 2007 budget
includes almost $200 million for Section 538 guaranteed loans for rural
rental housing--double the amount available for 2006. These guaranteed
loans may be used for either new construction or repairs and
rehabilitation. In most cases, they are used in conjunction with other
sources of financial assistance. These guaranteed loans help increase
the supply of rental housing in rural areas.
As for the Section 515 program, the administration proposes to
focus on the critical needs of the existing multi-family projects that
have been financed under this program, primarily in the 1980's. Almost
half a million rural people reside in these projects. A study completed
in 2004 demonstrated that most of the projects are still viable for
low-income housing; however, a substantial portion of these projects
are in need of revitalization. Moreover, there is a risk that some
projects will be prepaid and leave the program. This would put the
tenants of those projects at risk of substantial rent increases and
possible loss of their housing. The 2007 budget includes $74 million
for housing vouchers to assist these tenants. The administration has
also submitted a legislative proposal to Congress that authorizes debt
restructuring and other incentives to encourage revitalization coupled
with a long-term commitment from project sponsors to remain in the
program. Further, the 2007 budget reflects the administration's
commitment to fully funding the renewal of all expiring rental
assistance contracts, which is vital to keeping the projects affordable
to low income people.
Also, opportunities need to be provided for low-income people to
own their own homes. The 2007 budget supports about $1.2 billion in
direct loans and $3.5 billion in guaranteed loans for single-family
housing--about the same as available for 2006, except for emergency
funding for the Gulf Coast hurricanes. This level of funding is
expected to provide over 40,000 homeownership opportunities. All of the
direct loans and about a third of the guaranteed loans are expected to
go to low-income families with incomes below 80 percent of median
income.
NATIONAL VETERINARY MEDICAL SERVICES ACT
Question. In fiscal year 2006, Senator Kohl and I provided funding
to implement the National Veterinary Medical Services Act (NVMSA), to
help get more vets into underserved areas. No funds are requested by
USDA to continue this program in fiscal year 2007. A March 2005
Government Accountability Office report about agroterrorism states that
: ``USDA officials told us they intend to increase the number of
veterinarians entering public service by making new efforts to increase
veterinary students' awareness of potential careers in public
service.'' This appears to be inconsistent.
Why the inconsistency?
Answer. The $500,000 appropriated in fiscal year 2006 has not been
obligated. Therefore, there was no need to request funds in the fiscal
year 2007 budget. As no-year funds, they will be obligated when the
program is developed and incur costs. CSREES is currently working with
other agencies in the Department and informally discussing
implementation options with program constituents to determine how best
to design and deliver a full loan subsidy program. A critical initial
task will be to determine criteria for demonstrating, measuring, and
monitoring need for veterinarians across fields of service, geographic
locations, and national service needs. Once these criteria and program
guidance have been developed and made available for public comment,
specific needs for the program can be estimated.
Question. These vets will be extremely important as first
responders in the case of an outbreak of a foreign animal disease.
What is USDA doing to make sure that there will be enough vets
familiar with foreign animal diseases to help protect U.S. agriculture?
Answer. Veterinary Services, part of the U.S. Department of
Agriculture's Animal and Plant Health Inspection Service (APHIS),
administers the National Veterinary Accreditation Program. This
voluntary program certifies private veterinary practitioners to work
cooperatively with Federal veterinarians and State animal health
officials. Accredited veterinarians are instrumental in increasing our
capability to perform competent health certifications, maintain
extensive disease surveillance and monitoring, and provide valuable
veterinary service during national emergencies. Producers that export
animals interstate and internationally rely on the expertise of
accredited veterinarians to help ensure that exported animals will not
introduce diseases into another State or country. The accreditation
program has served the animal industry well for many years and remains
integral to their future growth. There are currently over 60,000 active
accredited veterinarians in the national database.
The President's budget requests $2.4 million to enhance the
National Veterinary Accreditation Program to develop web-based
certification and training modules for veterinarians. This will provide
a method for veterinarians to expand their knowledge of, and vigilance
for foreign animal diseases.
MANDATORY COMMODITY PROGRAMS
Question. Mr. Secretary, the administration's fiscal year 2007
budget includes a legislative proposal to reduce farm program spending
by approximately $1 billion in fiscal year 2007. This proposal would
include a number of changes to the current farm law that would decrease
commodity support.
Please take a moment to describe this legislative proposal and the
cost savings that will be achieved should it become law.
Answer. The fiscal year 2007 Budget again proposes some changes in
farm programs designed to save about $1.1 billion in fiscal year 2007
and about $5 billion over a 5 year period. Key changes proposed
include: a 5 percent reduction in all farm program payments; a
reduction in the payment limit from $360,000 to $250,000 per natural
person; a 1.2 percent assessment on all sugar marketed; a three cent
per hundredweight assessed on milk marketed; cost minimizing
adjustments for the dairy price support program, and some moderate
changes in the crop insurance program, including modest reductions in
premium subsidies and in administrative expenses paid to crop insurance
companies.
FOREST SERVICE FUNDING
Question. Please give us details on any funding provided by this
subcommittee that benefits the United States Forest Service. Include
agencies and amounts.
Answer. The Forest Service receives a small amount of funding
provided by the Agriculture Subcommittee to the Hazardous Materials
Management (HMM) account. Funds are used to address environmental
contaminations on Federal land. More details are provided for the
record.
[The information follows:]
The appropriation language for the HMM account provides for the
necessary expenses of the Department of Agriculture to comply with the
Comprehensive Environmental Response, Compensation, and Liability Act
(CERCLA) and the Resource Conservation and Recovery Act (RCRA). The
funds remain available until expended and may be transferred to any
agency of the Department for its use in meeting requirements pursuant
to CERCLA and RCRA on Federal and non-Federal lands.
Agencies compete for HMM funding by submitting proposals explaining
the RCRA or CERCLA work that is needed, the strategic impact of that
work, and the public benefits that will be realized. Funding priorities
reflect those planned impacts and benefits. The following table shows
actual amounts for fiscal year 2005, estimated fiscal year 2006, and
requested fiscal year 2007 HMM budgets for USDA agencies:
USDA HMM BUDGETS FOR FISCAL YEARS 2005, 2006, AND 2007
[In thousands of dollars]
----------------------------------------------------------------------------------------------------------------
Fiscal year
Agency -----------------------------------------------
2005 actual 2006 estimate 2007 request
----------------------------------------------------------------------------------------------------------------
Agricultural Research Service................................... 2,259 3,770 2,027
Food Safety and Inspection Service.............................. 17 .............. ..............
Forest Service.................................................. 5,645 4,900 6,593
Departmental Administration \1\................................. 2,580 1,533 1,700
Office of the General Counsel................................... 1,484 1,677 1,700
-----------------------------------------------
Total..................................................... 11,985 11,880 12,020
----------------------------------------------------------------------------------------------------------------
\1\ Actual reflects amounts under DA's Office of Procurement and Property Management, as well as for agencies
not in the FFIS system, CCC, FSA, and Rural Development.
The HMM funding the Forest Service receives in this process
supplements the $10-15 million of annual Forest Service funding in
support of USDA's Hazardous Materials Management Program. The Forest
Service is not required to reimburse the account, except when cleanup
costs are recovered from other responsible parties. It is estimated
that HMM funding helped to leverage the estimated $22 million of
environmental cleanup work responsible parties performed in lieu of
cash payments in fiscal year 2005.
financial management system
Question. The budget request includes an increase of $13.9 million
to begin planning for the implementation of a new financial system. I
understand that these funds will be used for hardware and software
procurement.
What, specifically, does USDA plan to purchase with this funding?
Answer. USDA is pursuing modernization of its core financial
management system and associated business practices. It is critical
that this modernization be advanced now to ensure a sound financial
management system to support the Department's large and diverse
portfolio of programs. The new, web-based system will replace outdated
technology that is costly to maintain and not fully compliant with
current financial management standards. Further, the new system will
allow full integration of existing and new eGovernment initiatives and
provide efficiency through shared services. Funds requested for 2007
are needed to begin the process of designing and implementing the new
system. Specifically, the funds will support a contract to begin
acquiring hardware and software. Implementation is expected to continue
for approximately 5 years beginning with a 1-year planning and start-up
phased during 2007.
Question. What is the status of the planning and implementation
effort for the new financial system?
Answer. The new financial management system, called the Financial
Management Modernization Initiative (FMMI), is in the early stages of
procurement. A Request for Information was released in August, 2005.
The information USDA received was used to further refine USDA's plans.
A Request for Proposals was issued in late December, 2005 to solicit
contractors to provide planning and integration services for the
financial management system. USDA prefers to contract with one entity
for both the hardware and software. It is expected that a contract will
be awarded in the fourth quarter of fiscal year 2006 so that
integration planning and implementation can begin and continue during
fiscal year 2007.
Question. Does USDA have an estimate for how much it will cost to
fully implement the financial system?
Answer. Until USDA receives and evaluates proposals, we will not
know the total cost or schedule for implementing FMMI.
Question. How does USDA plan to pay for this system? Will all of
the funding come through the CFO account or will each USDA agency be
asked to provide funding for the system?
Answer. USDA will determine the funding approach after we receive
and evaluate proposals for FMMI. The funding requested for fiscal year
2007 is critical to permit the project to continue to move forward.
PROVINCIAL RECONSTRUCTION TEAM
Question. Please provide detailed information on USDA's past
participation in the Provincial Reconstruction Teams, including total
funding obligated. Please give specific examples of the results
achieved and the number of individuals who served as advisors and their
employing agency.
Answer. USDA agricultural advisors on Provincial Reconstruction
Teams (PRTs) in Afghanistan provide technical guidance to PRT
commanders, local and international non-governmental organizations, and
individual farmers and herders. Advisors also provide training and
information for local offices and staff of Afghanistan's Ministry of
Agriculture, Animal Husbandry and Food, and the Ministry of
Reconstruction and Rural Development. Additional information is
provided for the record below.
[The information follows:]
Total funding obligated for these activities, including State
Department International Cooperative Administrative Support Services
(ICASS) costs, is shown below by fiscal year:
------------------------------------------------------------------------
Fiscal year Amount
------------------------------------------------------------------------
2004.................................................... $940,000
2005.................................................... 2,628,000
2006 (projected) \1\.................................... 3,909,000
2007 (projected)........................................ 5,012,000
------------------------------------------------------------------------
\1\Includes $1 million transferred to USDA from the U.S. Agency for
International Development to help defray an unanticipated increase in
security and other support costs.
From 2003 through 2006, 39 USDA staff served on PRTs in
Afghanistan. Currently, USDA has six advisors in Afghanistan, including
an area agronomist for the Natural Resources Conservation Service from
Brice, Utah, who serves on the Farah PRT.
USDA agencies and the number of their staff participating over the
years are as follows:
--Natural Resources Conservation Service--17
--Food Safety and Inspection Service--6 Farm Service Agency--4
--Rural Business Cooperative Service--3
--Animal and Plant Health Inspection Service--3
--Cooperative State Research, Education, and Extension Service--2
--Foreign Agricultural Service--2
--Agricultural Marketing Service--1
--Forest Service--1
Below are some specific examples of results achieved:
--USDA advisors guided their Afghan counterparts in organizing the
protection of the endangered Koli-Kashman watershed. More than
2,500 trees were planted to stabilize the watershed; other
conservation plant materials were incorporated; and erosion
control and other protective structures were established. More
than 2,570 paid labor days were generated to benefit Afghan
participants. Disarmed and demobilized combatants were trained
and employed for this activity, as well as unemployed youth,
women, the elderly, and disabled. The program is being
replicated in 28 other provinces.
--USDA advisors serving on PRTs in the Kandahar area designed,
secured funding, and worked with their military counterparts to
install 15 windmills to pump water for irrigation and
livestock. The advisors established a distribution network and
water user associations to operate and maintain the systems.
Alternative sources of energy are extremely important in this
country which has negligible reserves of fossil fuels.
--A USDA veterinarian designed, secured funding, constructed, and
trained Afghans to staff two veterinary clinics in Parwan and
Kapisa Provinces. These clinics provide access to professional
animal health care and herd improvement information for
Afghanistan's livestock producers. Approximately 85 percent of
Afghanistan's families own livestock; therefore, this is a
critically important service.
--A USDA advisor serving on the Kondoz PRT trained local non-
governmental organizations to provide credit programs to
farmers and rural businesses. Credit cooperatives were
established throughout northeast Afghanistan, and they have
remained functional and financially solvent for nearly 3 years.
These credit programs have provided the first access to credit
in decades for farmers in this region of Afghanistan, and have
resulted in increased agricultural production and incomes.
--USDA advisors provided training to faculty at the agricultural
colleges in Jalalabad, Herat, Kandahar, and Kabul. Curricula
were developed for new courses and new training materials were
developed and shared with other agricultural training
institutions. Training was provided in veterinary sciences,
natural resources management, horticultural production, and
farm management. This training provided these faculties with
their first exposure in decades to modern course materials and
technical information on current agricultural practices.
--The USDA advisor serving on the Kandahar PRT established a
province-wide poultry project that provided eggs to more than
400 families, for consumption and sales. This project provided
direct benefits to women and children through increased family
incomes and improved nutrition.
Question. How will the $5,000,000 requested in the budget to
continue USDA's participation in the PRT be used, (e.g. salaries,
training, equipment, logistical support)? How much will go to the
Department of State or any other department?
Answer. Approximately $3,400,000 is for salaries, benefits, and
allowances and $830,000 is for travel, equipment, program costs, and
other support. Approximately $782,000 is budgeted to go to the
Department of State for projected ICASS and security costs.
FOREIGN SERVICE PERFORMANCE PAY
Question. The budget requests $990,000 for foreign service
performance pay. Why is this funding needed? How was this figure
arrived at? What criteria will be used to award such funding? Why was
this requested in the Office of the Secretary?
Answer. The requested funding supports the first step of transition
to a performance-based pay system and global rate of pay for Foreign
Service personnel grade FS-01 and below. The forthcoming Foreign
Service Modernization legislative proposal linked to this funding would
amend Section 406 of the Foreign Service Act (22 USC 3966) to eliminate
longevity-based pay increases and institute a strictly pay-for-
performance system similar to that instituted for the Senior Foreign
Service in Public Law 108-447.
The proposal would also establish a global rate of pay for the
Foreign Service to attract and retain a labor market for worldwide-
available personnel, based on the needs of the Service, consistent with
other pay systems with similar worldwide availability requirements.
This global rate also addresses the increasing pay disincentive to
overseas service, due to the frequent rotation of assignments,
influenced by 5 USC 5304.
The Modernization proposal would equalize the Foreign Service
global rate at the Washington, DC, rate, including locality pay, over 2
years. The requested funding supports the first step of this
transition. Additional funding will be required in fiscal year 2008 and
fiscal year 2009 to fully close the gap, in order to begin a new pay-
for-performance system effective April 2008, under a uniform global
rate pay system. Funds are requested in the Office of the Secretary so
that further allocations can be made to the agencies within USDA that
have Foreign Service personnel.
CROSS CUTTING TRADE NEGOTIATIONS AND BIOTECHNOLOGY RESOURCES
Question. How has the fiscal year 2006 funding for this been used
(please be specific and give examples of the results achieved)? What
agencies are involved in the utilization of this funding? What will the
proposed increase of $366,000 achieve?
Answer. Funding in the Office of the Secretary to support cross-
cutting trade negotiation and biotechnology issues allows critical
coordination of efforts that span several agencies within USDA. In
addition to supporting the Senior Advisor to the Secretary, the
agencies involved in the biotechnology funding are: the Animal and
Plant Health Inspection Service; the Cooperative State Research,
Education, and Extension Service; and the Foreign Agricultural Service.
Their use of the money is described below.
The proposed increase of $366,000 would enable the Department to
more effectively address:
--Quantitative analyses and studies needed to support increasingly
complex compliance activities;
--Expansion of a project to develop a regulatory and trade strategy
for specialty crops;
--Increased activity in the area of transgenic animals--domestically,
in international markets, and in international standard setting
organizations; and
--Increasing need for communication materials for both domestic and
international markets.
[The information follows:]
APHIS has used the fiscal year 2006 funding for a number of small
to medium size projects that together will strengthen and improve the
biotechnology regulatory process:
--Extended an existing agreement with the National Plant Board to
continue the collection of information from the States and
stakeholders on key aspects of the agency's regulatory system
and items that APHIS should consider during State evaluations.
These efforts will help APHIS to improve the biotechnology
regulatory process.
--Extended our current agreement with the National Association of
State Departments of Agriculture (NASDA) to coordinate and
conduct the pilot program for State personnel to perform
notification inspections. Once the pilot project is complete, a
task group consisting of NASDA and APHIS personnel will conduct
a full joint review of the program.
--Continued work with Iowa State University to prepare additional
chapters for the APHIS-Biotechnology Regulatory Services
equipment inspection manual to be used to train third-party
inspectors (State and other APHIS employees) on proper
techniques and procedures for cleaning and inspecting equipment
for contaminated materials.
--Supported the agency's efforts to procure a geographical
information system to assist in managing and analyzing program
data. Examples include the production of large and small maps
of regulated States, counties and sites to improve compliance,
risk analysis, and program management functions; the ability to
``geo-identify'' sites that may have been affected by weather
events such as hurricanes or tornados in order to respond
appropriately to these events to evaluate the potential spread
of regulated genetic materials; and the ability to layer a
number of data sets on a single map to provide the APHIS
biotechnology regulatory program with an enhanced data analysis
capability.
The fiscal year 2006 funding for Cooperative State Research,
Education, and Extension Service has been used to begin the development
of an
implementation/business plan by a contractor to deal with
biotechnology regulatory issues associated with specialty crops. To
date, a Scope of Work was prepared, and proposals were received by the
Specialty Crops Regulatory Initiative (SCRI) Steering Committee. The
Steering Committee is composed of representatives of technology
developers, including USDA, 1890 and 1862 land-grant universities,
other universities, a spectrum of private sector companies, and
commodity groups.It is anticipated that a consultant will be hired in
May 2006, through an award to Arkansas State University. A draft
business plan is anticipated by the end of the year, to include
proposals for the structure and function of the SCRI, and
implementation plans including mechanisms to fund the finalization of
the operation of the SCRI.
The Foreign Agricultural Service has applied the fiscal year 2006
funds to address global market access issues, capacity building, and
technical assistance needs associated with agricultural biotechnology.
In collaboration with other Federal agencies, funds have been targeted
to sustain and expand a number of ongoing bilateral and multilateral
activities aimed at advancing the development of science and rule-based
regulatory systems for the products of agricultural biotechnology and
adherence to World Trade Organization principles. This in turn has
helped foster global market access for U.S. agricultural products that,
increasingly, are produced using modern biotechnology.
Specifically, policy and technical engagement with Japan, China,
Canada, and Mexico, as well as within the Asia Pacific Economic
Cooperation (APEC) and other international fora, has helped maintain
open access to these key markets for U.S. agricultural products,
including those produced through modern biotechnology. A notable
success of the engagement has been the continued market access for U.S.
corn exports to Japan after an unapproved biotechnology corn product
was found in the United States. Bilateral and multilateral efforts have
been undertaken with countries in the Western Hemisphere, as well as
China and Japan, which have helped guide implementation of the
Cartagena Protocol on Biosafety in a practical and predictable manner
that will maintain access to global markets for U.S. agricultural
products. Numerous technical assistance and educational activities have
been undertaken aimed at promoting adoption and acceptance of
biotechnology. These have included outreach to farmers in Africa and
efforts to promote farmer adoption of plum pox resistant plum
production in Europe. Targeted technical assistance and policy
dialogues on biotechnology have also been undertaken with numerous
countries with which the United States is engaged in FTA negotiations.
OFFICE OF CIVIL RIGHTS
Question. Please generally describe the Civil Rights Enterprise
System and provide the following information: How much funding has been
provided for this system through fiscal year 2006? What is the total
anticipated cost of the system? How has this system helped improve the
processing and resolution of discrimination complaints?
Answer. The Civil Rights Enterprise System (CRES) is a web-based
USDA enterprise-wide complaint tracking system used for tracking,
processing and reporting employment and program complaints. The system
is being implemented in two phases: Phase 1--Employment Complaints
Tracking System in fiscal year 2004 and 2005, and Phase 2--Program
Complaints Tracking System in fiscal year 2006 and fiscal year 2007.
The CRES project is on schedule and within budget. Phase 1, the
Employment Complaints Tracking System component, has been fully
implemented and is currently operational. The employment complaint
legacy systems have been shut down. Phase 2, the Program Complaints
Tracking System is under development with testing scheduled for the
summer.
One of USDA's most significant achievements is the implementation
of a web-based, Department-wide discrimination complaint tracking
system in fiscal year 2004 to track, process and report on employment
and program complaint activity.
The Civil Rights Enterprise System is being implemented in two
phases:
--Phase 1--Employment complaint tracking system was implemented on
time and within budget during fiscal year 2005.
--Phase 2--Program complaint tracking system will be implemented in
fiscal years 2006 and 2007.
Additional information is provided for the record.
[The information follows:]
CRES planned budgeted cost is as follows:
------------------------------------------------------------------------
------------------------------------------------------------------------
Fiscal year 2003............. System Planning. $0.1 million, completed
Fiscal year 2004............. System 1.6 million, completed
Acquisition &
Implementation
Costs.
Fiscal year 2005............. System 1.5 million, completed
Acquisition &
Implementation
Costs.
Fiscal year 2006............. System 1.8 million, planned
Acquisition &
Implementation
Costs.
Fiscal year 2007............. System 1.987 million, planned
Acquisition &
Implementation
Costs.
------------------------
TOTAL.................. ................ 6.987 million, planned
------------------------------------------------------------------------
The Civil Rights Enterprise System has improved efficiency through:
--Standardization and elimination of duplicative systems.
--Real time access to EEO complaint data.
--Support of a paperless environment.
--Ability to track, process and report informal and formal employment
complaint activity.
--Implementation of accurate performance based reports.
In fiscal year 2006, USDA is enhancing the Civil Rights Enterprise
System, including ``eFiling'' and an online docketing system that will
allow complainants and agency representatives to access real time
complaint status information. These initiatives are currently in the
development and testing phase.
This includes the ability to respond to mandatory reporting
requirements, including:
--Annual Federal Equal Employment Opportunity Statistical Report of
Discrimination Complaints (EEOC Form 462).
--Notification and Federal Employee Antidiscrimination and
Retaliation Act of 2002 (the No FEAR Act).
--EEOC Management Directive 715.
Question. What are the specific activities and their associated
funding in the fiscal year 2007 budget that are targeted to the
prevention of equal employment opportunity and program complaints?
Answer. As Secretary of Agriculture, I am firmly committed to
ensuring the civil rights of all USDA's customers and employees. The
Office of the Assistant Secretary for Civil Rights was reorganized in
July 2005 to facilitate the fair and equitable treatment of USDA
customers and employees while ensuring the delivery and enforcement of
civil rights programs and activities. This includes processing
complaints in a time and cost effective manner and implementing
initiatives to prevent EEO and program complaints. Additional
information on prevention activities is provided for the record.
[The information follows:]
OFFICE OF CIVIL RIGHTS PROGRAM FUNDING
Conflict Prevention Resolution
The Conflict Prevention and Resolution Center (CPRC) was
established to lead and coordinate conflict management and ADR efforts
throughout USDA. ADR programs exist in all USDA agencies and mission
areas, and vary in both scope and level of activity. ADR itself is
applicable, in a variety of forms, to workplace disputes, EEO
complaints, USDA program disputes, including civil rights complaints,
and group interventions. Reorganization and subsequent inclusion of
CPRC in Civil Rights maintains the USDA-wide focus on conflict
resolution, with additional emphasis in support of the Assistant
Secretary for Civil Rights.
Outreach
The USDA Office of Outreach strengthens USDA outreach efforts to
limited-resource farmers and ranchers and under-represented customers,
coordinates program delivery outreach throughout USDA, and assists
underserved customer groups in collaboration with the Agency Outreach
Coordinators and State Outreach Councils. Outreach develops policy,
thereby enhancing the building of partnerships with universities/
colleges, community/faith-based organizations and other groups,
associations and organizations. Outreach provides leadership through
policy guidance, high-level strategic planning and goal setting,
performance measurement and feedback to USDA national, State and local
outreach coordinators and councils. Outreach monitors, analyzes, and
evaluates trends related to USDA programs and activities through
mission area outreach plans, outreach coordinators, and State outreach
councils. Outreach develops and provides training and education in
outreach function models, best practices, policies, environmental
justice, strategic plans and goals to USDA employees and stakeholders
to provide an effective educational resource and linkage to internal
and external customers regarding USDA-wide programs.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Fiscal year Fiscal year Fiscal year
Program 2005 funding Fiscal year 2006 funding Fiscal year 2007 funding Fiscal year
actual 2005 FTEs estimate 2006 FTEs estimate 2007 FTEs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Outreach......................................................... $1,338,387 8 $981,000 8 $1,001,000 8
Conflict Prevention & Resolution Center.......................... 706,700 6 736,000 6 751,000 6
--------------------------------------------------------------------------------------
Totals..................................................... 2,045,087 14 1,717,000 14 1,752,000 14
--------------------------------------------------------------------------------------------------------------------------------------------------------
______
Questions Submitted by Senator Arlen Specter
DAIRY ASSISTANCE
Question. Agriculture is the largest industry in Pennsylvania,
producing over $45 billion annually and providing approximately 1 in 6
jobs in agriculture and related businesses. Of this industry, dairy is
the number one sector in the State and ranks number 4 in overall milk
production in the entire Nation. Milk prices for dairy farmers have
been on a down trend since January and economists project that the
price of milk will continue to fall. The proposed 3 cent per cwt.
assessment in the fiscal year 2007 Budget on all milk production will
only compound the severity of this situation. Although the Milk Income
Loss Contract (MILC) program, that I worked very hard on to be extended
to October 2007, will provide the safety-net needed for our dairy
farmers, the falling prices of milk and the continued high costs of
fuel will make it more difficult for dairy farmers across America to
survive.
What does the Department plan on doing to help our Nation's dairy
farmers when they need you the most?
Answer. We share your concern about the rising cost-price pressures
faced by dairy farmers and for that matter most farmers. In addition to
the credit and other programs the Department has available to help
producers when financial stress rises, our dairy programs are by design
geared to provide support when prices decline. The dairy price support
program puts a floor under milk prices to provide some protection in
that way. And as you mentioned, the Milk Income Loss Contract (MILC)
program will provide some counter-cycle protection by providing
payments to eligible dairy producers when prices decline. As you will
recall the President had proposed that this program be extended through
the end of the 2002 Farm Bill and Congress did enact that extension in
the recent Deficit Reduction Act. The Department is now implementing
the newly extended program.
COMMODITY SUPPLEMENTAL FOOD PROGRAM
Question. The Commodity Supplemental Food Program (CSFP) provides
6.4 million food packages to over 400,000 mothers, infants, children,
and primarily low-income seniors--in fiscal year 2005, 15,575
households in PA received CSFP packages. CSFP food packages are
delivered monthly, and provide $50 worth of food including cheese,
milk, and canned fruits and vegetables. The President eliminated this
program in his fiscal year 2007 budget, stating Food Stamps and the WIC
program could meet the needs of CSFP recipients. However, seniors, who
represent 90 percent of CSFP recipients, are not eligible for the WIC
program, and many of these seniors are also not eligible for food
stamps, or are eligible to receive only $10 per month in food stamp
benefits. An additional benefit of the CSFP program to seniors with
disabilities is that they do not have to leave their home to receive
the CSFP food package.
How does the Department plan to meet the needs of many of these
seniors who depend on the CSFP program and who will not be eligible to
receive any benefits, or will receive reduced benefits, from the Food
Stamp program?
Answer. Elderly participants who are leaving the CSFP upon the
termination of its funding and who are not already receiving Food Stamp
Program (FSP) benefits will be eligible to receive a transitional
benefit worth $20 per month ending in the first month following
enrollment in the FSP under normal program rules, or 6 months,
whichever occurs first. We estimate that most elderly CSFP participants
will be eligible to participate in the regular Food Stamp Program.
Based on the information we have about the characteristics of all
elderly food stamp participants, the average monthly food stamp benefit
for an elderly person living alone was $65 per month in 2004. The
percentage of food stamp households with elderly that received the
maximum benefit (14 percent) was nearly as large as the percentage that
received the minimum benefit of $10 (17 percent). Thus, most elderly
food stamp participants receive more than the $10. We expect that this
pattern would extend to new FSP participants leaving the CSFP as well.
LIVESTOCK PROTECTION PROGRAM
Question. The Livestock Protection Program (LPP), implemented by
the Pennsylvania Department of Agriculture, in conjunction with the
U.S. Department of Agriculture's (USDA) Animal and Plant Health
Inspection Service (APHIS) Wildlife Service (WS), the Pennsylvania Game
Commission, and the Pennsylvania State University is a crucial pilot
program that provides technical and operational assistance to help
Pennsylvanian agriculture producers control wildlife damage to their
crops and property. Started in 2005, this program is fully implemented
in eight counties, while on a limited basis across the rest of the
Commonwealth of Pennsylvania. The goal of the LPP is to expand fully to
other counties in order to protect dairy farmers from feed loss due to
starlings, protect sheep farmers from coyotes, and protect property
from geese damage. On an annual basis, dairy farmers lose about $2,000
from feed loss due to starlings. I, along with U.S. Senators Bennett
and Santorum, and U.S. Representatives Sherwood, Holden, Shuster,
English, Platts, Kanjorksi, Murphy, and Murtha sent you a letter on
January 24th requesting that you direct any additional fiscal year 2006
Agricultural Appropriations funding for APHIS Wildlife Services to the
LPP in order to keep this important program in existence.
What is the status of this request? Does the Department plan on
redirecting extra funds to the Livestock Protection Program?
Answer. The Department recognizes the vital role of agriculture and
the LPP to Pennsylvania's economy. APHIS allocated $70,000 in fiscal
year 2006 to support this program.
______
Questions Submitted by Senator Christopher S. Bond
NATIONAL AGRO-FORESTRY CENTER
Question. When USDA National Agro-forestry Center, a partnership
between the Forest Service and NRCS, in Lincoln, NE, was affected by
the NRCS re-organization, the USDA provided assurances that the center
would be supported by NRCS at a funding level of $655,000.
What was the actual NRCS funding for the above mentioned
partnership in Lincoln, NE in 2006? How much is the NRCS funding for
the above mentioned partnership in Lincoln, NE for 2007?
Answer. NRCS continues a close collaboration with the National
Agroforestry Center. A NRCS Lead Agroforester position was
reestablished and filled at the beginning of fiscal year 2006 and
additional direct support totals $140,000. This position serves as a
liaison with the Center. Further support is provided from the three
foresters at NRCS new National Technology Support Centers. Salaries and
support total an estimated $360,000. The total support cost in fiscal
year 2006 is $500,000. Specifics for the fiscal year 2007 Budget have
not been developed.
NATIONAL INSTITUTE FOR FOOD AND AGRICULTURE
Question. The President announced a major initiative as part of the
State of the Union address to enhance America's competitive standing in
the global marketplace. The American Competitiveness Initiative
proposes to significantly boost the Federal Government's investment in
basic research for the physical sciences acknowledging the vital
importance of basic research to future discovery and eventual economic
growth.
How much basic research does USDA perform? Over the last two
decades has that amount grown? Would the establishment of a National
Institute for Food and Agriculture---similar to other National
scientific institutes like the NIH or NSF enhance the future
competitiveness of our farm and food sectors? If so, will you endorse
its creation?
Answer. While the distinction between basic and applied research
is not clear cut, it is estimated that slightly less than half of the
USDA research budget supports basic research.
The National Institute for Food and Agriculture is one of several
initiatives that have been proposed to strengthen the Nation's
agricultural research system, with the ultimate goal of strengthening
the competitive position of the U.S. farm and food sector. NIFA, among
other proposals, has generated useful discussion among the diverse
stakeholders of the food and agriculture research community that enrich
future consideration of options for strengthening the research
component of the farm and food sector.
Question. The National Institutes of Health spends nearly $15 on
research for every dollar spent by the USDA. In competitive, merit
based, peer-reviewed grants--long considered the best way to achieve
advances in fundamental science--the NIH outspends the USDA by more
than 100 to 1.
What is the cause for this funding imbalance? Do you believe the
competitive interests of our farmers are being met with such a funding
disparity?
Answer. The administration continues to show strong support for
the National Research Initiative (NRI), the competitive, merit-based,
peer-reviewed grant program within USDA. Funding for the NRI has
increased in recent years, and the administration has requested an
increase of $66.3 million in fiscal year 2007. The NRI is a critical
component of a balanced research portfolio of intramural and extramural
research that is effectively serving the competitive interests of
farmers.
Question. In USDA's budget proposal for fiscal year 2007, your
administration lists six strategic goals that describe the Department's
major objectives which include enhancing international competitiveness,
enhancing the competitiveness and sustainability of rural economies,
enhancing food safety, improving the Nation's nutrition and health,
protecting our natural environment, establishing energy independence
and improving the quality of life in Rural America. Similar objectives
were listed by the 2002 USDA Research, Education and Economics Task
Force which called for the creation of a National Institute for Food
and Agriculture to achieve these goals.
Has the Department taken any steps to meet the objectives outlined
in this task force report? My thought would be that if NIFA were in
place for the last 15 years we probably would be producing at least 20
percent of our energy needs from cellulose sources and other renewable
fuels. Would you agree with that?
Answer. The Department's fiscal year 2007 strategic goals are
similar to those identified by the 2002 USDA task force report. This
suggests that the Department's research agencies and programs are
focused on achieving the same goals and objectives as those outlined in
the task force report.
Question. Mr. Secretary, since this administration financially
supports joint research with major overseas competitors like India to
improve farming technology as part of an Agricultural Knowledge
Initiative, will this administration support an agricultural knowledge
initiative here at home known as the National Institute for Food and
Agriculture? It seems to me, Mr. Secretary that we ought to reinvest in
our research infrastructure here at home before going overseas. I think
my farmers would support a major U.S. Agricultural Initiative before
they would support a U.S.-India Agriculture Initiative. Let's fix our
own research problems before fixing those of our competitors.
Answer. The Department has a strong agricultural research program
that is generating new knowledge and technology that will enhance
American farmers' ability to be competitive in global markets. In
particular, the administration continues to support the National
Research Initiative, USDA's flagship competitive research program. In
the fiscal year 2007 Budget the President once again recommends
increasing the investment in the NRI to help address the critical
issues facing our Nation's farmers.
EPA REGULATIONS
Question. Specific provisions of concern to Ag retailers and
distributors regards the proposed EPA rules relating to secondary
containment requirements covered under ``Scope and Applicability''--
Section 165.141 (This defines facilities covered by these sections of
the rule) through ``Administrative Standards''--Section 165.157.
Included in these sections are new Federal requirements that relate
to bulk pesticide containment only. For example, ``General Requirements
for Containment Structures''--Sec. 165.146(a)(1)(2) and ``Specific
Requirements for Liquid Bulk Containment Structures''--Section
165.148(a) discuss types of containment structure Ag retailers would
need to comply with.
Will the above mentioned specific provisions be applied in a fair
and even manner for the entire Ag sector? If not, then will these
provisions be dropped from any final EPA rule and continue to allow the
States to regulate this area as they have been doing for the past
several decades without EPA oversight?
Answer. EPA administers pesticide regulations under the Federal
Insecticide, Fungicide and Rodenticide Act (FIFRA), and is responsible
for their implementation and interpretation. USDA and EPA actively work
together to ensure unnecessary regulatory burdens are not imposed on
the agricultural sector. We will work with EPA to encourage them to
adopt provisions in the rulemaking that can be applied in a fair and
even manner for the entire Ag sector.
______
Questions Submitted by Senator Conrad Burns
RESUMING BEEF EXPORTS TO JAPAN
Question. Mr. Secretary, many of my producers in Montana are
frustrated that you don't appear to be taking a more firm stance with
Japan regarding beef exports.
Can you tell me what USDA is doing to get the borders back open?
Answer. On January 20, when we announced that a U.S. exporter sent
a shipment of veal to Japan that did not comply with the terms of the
Export Verification Program, we made very clear that we take this
matter very seriously. We immediately set about to implement follow-up
actions that would prevent such an incident from occurring again and
would help get exports to Japan resumed as soon as possible. To help in
this effort, we made clear in a series of meetings with senior Japanese
officials that this is a top priority and that our investigation of the
incident would be thorough.
On February 17, the results of the Department's investigation into
the ineligible shipment of veal were announced. In conjunction with
that announcement, a comprehensive USDA report was released that
details the findings of the investigation and actions taken by USDA. At
that time, it was announced that additional actions beyond those
announced January 20 would be taken in response to findings in the
report. These actions go beyond the circumstances of the incident to
incorporate further efficiencies and protections into the U.S. export
system.
This information was submitted to Japanese authorities for their
review. The document contained two distinct reports: an investigation
by the Food Safety and Inspection Service and an audit by the Office of
the Inspector General. Japanese authorities reviewed the two reports
and transmitted questions to USDA about the report. USDA has responded
to all of Japan's official questions and delivered them to the Ministry
of Agriculture. In addition, a technical team will be traveling to
Japan in late March for meetings to provide any necessary
clarifications as well as respond to any remaining questions.
Department of Agriculture officials, as well as those from other
Executive Branch agencies, have pressed upon Japan the importance of
resolving this matter and the need to provide a timeline for
reestablishing trade. We have stated on a number of occasions that time
is of the essence and that we need to have assurances that this process
will not be drawn out. We have also made clear that Japan may be
inviting a complication in our bilateral trade relationship if this
matter is not resolved quickly.
PESTICIDES
Question. Mr. Secretary, you and I have often talked about the need
for USDA to serve as an advocate for agriculture at EPA. I am concerned
that rules relating to Superfund and pesticide containment are treating
agriculture unfairly, and I believe that you need to step up on behalf
of America's farmers and ranchers.
Can you share with the Committee your thoughts on the relationship
between EPA and USDA?
Answer. The Department normally reviews proposed rules that EPA
promulgates to evaluate their impact on USDA activities, and on
production agriculture. We work cooperatively with EPA, and often
provide comments, both informally and formally, in order to attain key
environmental objectives without unduly penalizing farmers and
ranchers.
Representatives of USDA regularly meet with EPA personnel in a
series of bi-monthly meetings to share progress on conservation
programs, and look for opportunities to assist producers in proactively
meeting regulatory constraints. These meetings also inform EPA staff so
that they can tailor regulatory programs to achieve protection of the
environment while allowing producers to have flexibility in achieving
the desired results.
For example, USDA has been working with EPA during their efforts to
promulgate regulations on the containment of pesticides at storage
facilities to achieve a final regulation that will not be unfairly
burdensome to agricultural producers. The draft final rule would
establish standards for removal of pesticides from containers and for
rinsing containers; facilitate the safe use, refill, reuse, and
disposal of pesticide containers by establishing standards for
container design, labeling and refilling; and establish requirements
for containment of large, stationary pesticide containers and for
containment of pesticide dispensing areas. These regulations do not
directly impact farm containers. Since this effort is not yet
finalized, I am not at liberty to discuss any further details of the
pending regulatory language, but we continue to evaluate proposed
changes and will provide EPA with comments on their draft final rule.
RENEWABLE FUELS
Question. Renewable fuel development holds tremendous potential
for rural States like Montana, particularly the development of
cellulose ethanol and biodiesel. I understand this is a top priority
for USDA.
Can you update the Committee on USDA's activities in implementing
the Energy title of the Farm Bill and in making producers aware of the
resources that USDA has available?
Answer. Renewable fuel and bioenergy development remains a top
priority for USDA. The Energy Title of the Farm Security and Rural
Investment Act of 2002 (Farm Bill) authorized various renewable fuels
programs. Section 9010 of the Farm Bill continued support for the
bioenergy program to support increased production of bioenergy. Since
fiscal year 2002, USDA has awarded over $450 million in payments to
bioenergy producers through this program. Section 9004 established the
Biodiesel Fuel Education Program through which USDA awards grants to
educate governmental and private entities and the public about the
benefits of biodiesel. USDA also continues to team with the Department
of Energy on the Biomass Research and Development Initiative with
authorized funding from section 9008. This initiative supports the
development of new bioenergy technologies and biobased products.
USDA conducts outreach to producers in many ways. Service Center
Agencies provide information at their individual locations. USDA
participates in many conferences each year that are designed to reach
producers and potential producers.
BEGINNING FARMERS AND RANCHERS
Question. I believe one of the most important things we can be
debating, especially in light of Farm Bill reauthorization, is role the
Federal Government can play in encouraging young farmers and ranchers
to get into production agriculture.
Is USDA considering incentives and/or elimination of barriers for
young farmers and ranchers, and how will that play into Farm Bill
proposals?
Answer. I recently completed a series of Farm Bill listening
sessions around the country. A recurring theme at these sessions was
the need to help young farmers and ranchers to get into production
agriculture. A number of comments and suggestions were received which
warrant consideration during the upcoming Farm Bill debate. Further,
the USDA Beginning Farmer and Rancher Advisory Committee will be
meeting later this year. In the past, this committee has provided
valuable guidance in framing Farm Bill debate pertaining to assistance
to beginning farmers and ranchers.
NATIONAL ANIMAL IDENTIFICATION SYSTEM
Question. Producers in Montana continue to be concerned about the
development of a national animal ID system. I hear concerns relating to
cost, confidentiality, and liability.
Can you please share what is being done to address these concerns?
Answer. The size and scope of the National Animal Identification
System (NAIS) demand that it be a cooperative program, with industry
and government sharing the cost of the necessary elements. By the end
of fiscal year 2006, USDA will have invested $84.8 million into
developing NAIS in terms of premises registration, information
technology development, education and outreach, and staffing. The
animal identification component is USDA's next implementation priority,
along with the information-technology architecture to support multiple
tracking databases. The animal tracking databases themselves will be
developed and maintained by industry and States, and the cost of
capturing animal movement data will be their responsibility.
USDA recognizes that some producers have concerns about misuse of
the data that will be collected and how the information will be
maintained. We are working with industry to establish an information
technology solution for animal movement data to be maintained in animal
tracking databases managed by the industry and States. As proposed,
USDA will only be able to access the information through a querying
mechanism initiated when a disease of concern has been reported. As
industry develops data collection systems and this process moves
forward, USDA will continue to keep producers informed. The NAIS will
not expose producers to any unwarranted or additional liability.
______
Questions Submitted by Senator Sam Brownback
NEW USES EXPO FOR BIOBASED PRODUCTS
Question. I recently sent a letter to you concerning the biobased
products component of the Department of Agriculture's Research,
Education and Economics ``Strategic Vision of 2005-2008''. I offered
Kansas City as a site for the USDA to host a New Uses Expo to highlight
new, non-food, non-feed uses for agricultural products. Your office was
kind to reply to my letter by saying that the USDA ``hopes to sponsor,
as resources allow, a National Biobased Products Conference to
highlight new biobased products'' in 2007.
Mr. Secretary, what resources does your department need in order to
make this New Uses Expo happen?
Answer. At this time, the Department has not committed to holding
a Biobased Products Conference in 2007. If we decide to hold a
conference, we will coordinate with other Federal agencies.
HORSE SLAUGHTER
Question. Last year the Senate passed an amendment that sought to
de-fund USDA inspections of horse packing plants. I believe this policy
to be extremely short-sighted. Now horse packing plants are required to
pay ``user fees'' for inspectors to certify the quality of the meat.
This is essentially an extra tax on packing plants that will lead to a
loss of jobs here in America. Plus, if we outlaw the slaughter of
horses, I believe this will lead to less humane treatment of unwanted
horses. Experts estimate 70-80,000 horses each year are disposed of
because they are no longer viable, are old, infirm, unmanageable or
unwanted. These same experts estimate this number will approach 100,000
unwanted animals a year very shortly and could double within a few
years. While most horses are sold, an unknown number are abandoned.
When sold, approximately 55,000 animals will move to USDA-regulated and
inspected processing plants, transported under USDA regulations,
promulgated under the Commercial Transport of Equine for Slaughter
provisions of the 1996 Farm Bill. Once they reach the processing plant,
these animals are euthanized humanely under the Federal Humane
Slaughter Act, and the meat is inspected and certified by USDA's Food
Safety & Inspection Service (FSIS). While some meat is sold in the
United States to satisfy cultural markets, the majority is exported.
Some argue these unwanted animals can be easily moved to existing
``adoption'' facilities. The capacities of such facilities range from 5
horses to, in rare instances, a maximum of 1,000 horses. The average
capacity of one of these facilities, however, is 30 animals. In the
first year of a Federal ban on horse processing, nearly 2,700
additional facilities would be needed, according the American
Association of Equine Practitioners (AAEP), the professional
organization of equine veterinarians. This is PETA's first salvo in the
war against meat. What's next, the outlawing of slaughtering cattle? I
intend to undo this mistake we made last year.
What is the administration's position on the ``Horse Slaughter''
amendment as passed last year?
Answer. USDA has abided by the prohibition of federally-funded USDA
inspections of horses presented for slaughter at official
establishments. The fiscal year 2006 Agriculture, Rural Development,
Food and Drug Administration and Related Agencies Appropriations Act
included a section prohibiting the use of appropriated funds to pay the
salaries or expenses of personnel to inspect horses (ante-mortem
inspection) after March 10. Conference report language for the act
recognized FSIS' obligation under existing statutes to ``provide for
the inspection of meat intended for human consumption (domestic and
exported).''
While the appropriations bill prohibited appropriated funds from
being used to pay for ante-mortem inspection, it does not eliminate
FSIS' responsibility under the FMIA to carry out post-mortem inspection
of carcasses and meat at official establishments that slaughter horses.
In response to a petition, FSIS established a fee-for-service program
under which establishments can apply and pay for ante-mortem inspection
of horses. The interim final rule became effective March 10, 2006.
LAND GRANT UNIVERSITY FUNDING
Question. As a Senator from a State with a first class land-grant
university and a graduate of that same university, I am very proud of
the legacy the land grant university system has in our country. As you
know the land grant university system makes up the infrastructure which
is the basis of our country's agriculture research, teaching, and
extension programs. These are programs that support our farmers,
ranchers, youth, families, and rural residents. Without the base funds
that our Land Grants schools receive for Hatch Act, McIntire-Stennis
Cooperative Forestry, and the Animal Health programs many schools would
be in dire straits to continue to offer programs that support our
constituents. The President's budget proposes to cut 55 percent of
Hatch Act funds, 50 percent of the McIntire-Stennis funds, that our
Land Grant Universities currently get and make them available only to
multi-state projects and eliminate the Animal Health funding. Some
Universities would very likely have to terminate many of their
Agriculture programs. Some may have to go as far as not offering
agriculture as part of a curriculum. A University like Kansas State
might suffer a loss of $1.6 million. Kansas State is an institution
that would compete very well for those funds if in a multi-state pool.
However, there would be major disruption in current programs while we
had to go through the motions of competing. They would have to lay off
faculty, stop on-going research projects, and undertake other
disruptive measures. And then there would be no guarantee that my
institution would get back to even. Without these funds the Land Grants
system would be in disarray.
In making this proposal, did you consider the financial and
programmatic impacts there would be on each Land Grant institution and
the other stakeholders who depend on these programs?
If ``YES''--can you please provide the Committee with a copy of
your analysis of these impacts?
If ``No''--How can you expect us to embrace such a major change in
program administration without a detailed analysis of how these changes
will affect the Land Grant institutions in our State?
Answer. Yes, we did consider the impact on eligible institutions.
The analysis is provided for the record.
[The information follows:]
REVIEW OF STAKEHOLDER RESPONSE TO THE FISCAL YEAR 2006 BUDGET AS
BACKGROUND FOR COOPERATIVE STATE RESEARCH, EDUCATION, AND EXTENSION
SERVICE (CSREES) FISCAL YEAR 2007 BUDGET PROPOSAL
Key Elements of the President's Fiscal Year 2006 Budget for CSREES
The fiscal year 2006 budget expanded the NRI to $250 million;
established a new, SAES Competitive Grants Program at $75 million; cut
the Hatch and McIntire-Stennis research formulas by 50 percent in 2006,
and 100 percent in 2007; cut the Animal Health (Section 1433) research
formula by 100 percent, starting in 2006; and moved six competitive
grants programs currently funded under Section 406, Integrated
Competitive Grants programs, to the integrated programs area of the NRI
initially provided through Congressional appropriations actions
beginning in 2004. The proposal also called for full indirect cost
recovery on all competitively award grants, up from the current level
of 20 percent of direct costs, and an increase in integrated grants
authority from 20 to 30 percent.
Congressional Response
In questions to the Agency during the hearing, and more intensively
in post hearing, written questions, the House sought accomplishment
information for formula based programs and asked the agency about
stakeholder input and the administration's analyses leading to the
recommendations to redirect formula funded research programs to
competitive grants.
The Senate committee is very unlikely to adopt the administration's
proposal to redirect formula funds to competitive programs, and may be
reticent to consolidate the 406 programs with the NRI, particularly if
this action limits the integrated programs in the NRI which began in
2004.
University Response
Agricultural Research and Extension Administrators, Land-Grant
Universities (LGUs): The collective response of these administrators
has been extraordinarily negative to the formula-competitive
conversion. Initial analysis of the university director's response to
the initial proposals in the President's fiscal year 2006 budget
indicate that the primary concerns are: (1) lack of consultation with
affected universities and stakeholders; (2) loss of matching funds; (3)
program continuity and length of awards; (4) sustaining breadth of
capacity in agricultural science and education nationwide; (5)
providing responsiveness to State and local issues; and (6) leveraging
and sustaining partnerships across institutions.
--Directors particularly have cited consequences for employment
(estimating as many as 2000 scientists and equal numbers of
technicians and graduate students will lose their jobs; see
CRIS tables on employment by Hatch projects for actual
numbers.); concerns about program infrastructure; loss of
matching funds; and continuity of efforts. In addition,
agricultural research directors have expressed concern about a
net decline in total research effort, if funds are diverted
from direct scientific effort to covering indirect
administrative expenses. They also are concerned by the speed
with which these changes would be implemented especially given
that they argue there was no consultation on the proposal. In
2005, LGU agriculture deans and directors have declined the
offer of CSREES to participate in a joint planning team to
examine alternate strategies to implement fiscal year 2006
proposed, competitive research programs.
--Central Administrators at LGU's: Chancellors, Presidents and Vice
President's for Research, particularly, though not exclusively,
those at larger institutions, have expressed support for the
proposals in the administration's fiscal year 2006 budget
proposal. Their support appears predicated not only on the need
for agricultural research grants to carry indirect cost
recovery to the degree consistent with other Federal grants,
but also to help bring agricultural science into the broader
fold--and stature--of peer reviewed research on campus.
Scientific Societies
Individual organizations and consortia of scientific societies have
supported growth in competitive research programs, and have been either
fully supportive of the fiscal year 2006 administration budget, or
supportive of the growth the NRI and other competitive programs while
silent on the formula-related provisions. For example, the American
Phytopathology Society has focused its lobbying efforts on seeking to
expand competitive grants, as included in the fiscal year 2006
proposal. Co-Farm, the Coalition for Funding Agricultural Research
Missions, is seeking overall growth in funding for agricultural
science, thus emphasizes programs with higher numbers than previous
appropriations. Episodic reports from individual scientists have varied
from concern about loss of start-up funds and preliminary studies
needed to test approaches prior to developing proposals for grant
funding provided by some institutions through formula programs to
supporting increases in available funds for competitive grants
especially to increase the average size and duration of awards.
Public Citizens and Associations of Producers, Processors, Consumers
and other Interests
Few citizens or public stakeholder groups have expressed views to
the Agency regarding funding mechanisms employed by CSREES. CARET, the
Council for Agricultural Research, Extension and Teaching, collectively
has called for the restoration of formula funds, although individual
members have expressed an interest in developing alternative funding
approaches. Major commodity groups have not expressed views on this
issue.
HATCH ACT
Recipients of Hatch Act funds have the flexibility to distribute
funds among research projects, infrastructure, and personnel as they
wish to meet the needs of their university. The distribution of these
dollars varies from State to State. The latest data on personnel
supported with Hatch funds as reported into the Current Research
Information System (CRIS) by recipients of Hatch Act Funds is for
fiscal year 2004. The recipient institutions do not assemble the data
until the close of the fiscal year and then the reporting process
requires approximately 6 months. The fiscal year 2005 data is being
collected now but not all institutions have made their reports
available yet. Therefore, we do not have complete data for fiscal year
2005 at this point. The recipient institutions do not report estimates
to CSREES so estimates for fiscal year 2006 and 2007 are not available.
The information is submitted for the record.
summary of personnel supported with hatch act funds in fiscal year 2004
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
MCINTIRE-STENNIS FORESTRY GRANTS
Recipients of McIntire-Stennis funds have the flexibility to
distribute funds among research projects, infrastructure, and personnel
as they wish to meet the needs of their university. The distribution of
these dollars varies from State to State. The latest data on personnel
supported with McIntire-Stennis funds as reported into the Current
Research Information System (CRIS) by recipients of McIntire-Stennis
Funds is for fiscal year 2004. The recipient institutions do not
assemble the data until the close of the fiscal year and then the
reporting process requires approximately 6 months. The fiscal year 2005
data is being collected now but not all institutions have made their
reports available yet. Therefore, we do not have complete data for
fiscal year 2005 at this point. The recipient institutions do not
report estimates to CSREES so estimates for fiscal years 2006 and 2007
are not available.
The information is submitted for the record.
[The information follows:]
SUMMARY OF PERSONNEL SUPPORTED WITH MCINTIRE-STENNIS FUNDS
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
ANIMAL HEALTH AND DISEASE RESEARCH
Recipients of Animal Health and Disease Research funds have the
flexibility to distribute funds among research projects,
infrastructure, and personnel as they wish to meet the needs of their
university. The distribution of these dollars varies from State to
State. The latest data on personnel supported with Animal Health and
Disease funds as reported into the Current Research Information System
(CRIS) by recipients of Animal Health and Disease Funds is for fiscal
year 2004. The recipient institutions do not assemble the data until
the close of the fiscal year and then reporting process requires
approximately 6 months. The fiscal year 2005 data is being collected
now but not all institutions have made their reports available yet.
Therefore, we do not have complete data for fiscal year 2005 at this
point. The recipient institutions do not report estimates to CSREES so
estimates for fiscal years 2006 and 2007 are not available.
The information is submitted for the record.
[The information follows:]
SUMMARY OF PERSONNEL SUPPORTED WITH ANIMAL HEALTH AND DISEASE RESEARCH
PROGRAM FUNDS IN FISCAL YEAR 2004
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
The Land Grant University System is supported through a broad
portfolio of funding mechanisms at the Federal, State, and in the case
of Cooperative Extension, the local level. The proposal in the fiscal
year 2007 President's budget for CSREES seeks to expand the proportion
of Federal funding flowing to agricultural research through credible,
competitive processes, while building on the strengths of land grant
universities to work together to solve research-based problems.
University and USDA staff members currently are working together to
design a multi-state program implementation plan such that universities
could address issues of great importance locally, which collectively
achieve regional or national goals in agriculture. The plan recognizes
the value of expanding the capacity at smaller institutions through
joint and collaborative work, addressing issues on local and State
agendas to assure matching funds for the programs, and recognizing the
geographically diverse nature of agriculture and natural resources.
Issues which could be addressed through expanded multi-state and
institutional collaboration include animal and plant disease, including
current issues such as citrus greening and Asian soybean rust; water
availability and management; best practices for small-sized
agricultural producers. In addition, the multi-institutional research
program has been used to expand access to subject matter colleagues
across State lines, rapidly respond to emerging issues, and sustain
national research support efforts, such as pesticide clearance.
By sustaining funding through the Hatch and McIntire-Stennis
programs, the President's budget proposal responds to concerns
expressed by universities in previous years about retaining matching
requirements, allowing planning and management of programs to remain in
the context of the Agricultural Experiment Stations (AES) and
Cooperative Forest Research programs, and proving continuity and
planning through a full, 5 year award cycle to AES directors and
Administrative Technical Representatives (McIntire-Stennis managers)
for each multi-state project in which a State participates.
Question. The Land Grant University System is currently undertaking
a comprehensive review of all of these programs and how they might be
changed in the context of the 2007 Farm Bill to meet the 21st century
challenges facing agriculture, rural communities, and our entire food
and fiber system through research, extension and teaching. Do you agree
that such changes can best be considered through a collaborative
process with an eye toward the 2007 Farm Bill as opposed to the
implementation of drastic changes imposed unilaterally by USDA?
Answer. Although revising the Farm Bill to restructure the research
agencies at the U.S. Department of Agriculture could address some of
the issues regarding sustainability of funding for science, other
concerns such as competitiveness, quality and coordination of programs
and projects, and linkage to other Federal Science programs also can be
addressed through budget allocations and mechanisms.
Question. Rather than imposing these drastic changes now, would you
be willing to continue engage the Land Grant System in their efforts to
review and build consensus for changes in our collaborative research,
extension and teaching efforts?
Answer. Currently, University and USDA staff members are working
together to design a multi-state program implementation plan such that
universities could address issues of great importance locally, which
collectively achieve regional or national goals in agriculture.
FARM PROGRAM FUNDING
Question. I applaud President Bush's proposal to reduce the payment
limit from its current $360,000 level to $250,000. I've voted for
lowering this limit in the past and I continuing to believe the payment
limit should be lowered from its current level. Obviously, this could
help play a role in reining in government spending. I also believe
tougher enforcement on those who circumvent the payment limits could
help us spend less money in commodity payments.
What commitment level does this administration give to lowering
payment limits, strengthening enforcement when loopholes are found and
developing a measurable standard to determine who should and should not
be receiving farm subsidies?
Answer. The President's Budget for fiscal year 2007 includes a
package of proposed farm program changes for the purpose of reducing
spending in these programs as part of the effort to reduce the budget
deficit. One of these proposals would reduce payment limits and
significantly reform current payment limitation law. Among other things
the proposal would reduce the overall payment limit from $360,000 to
$250,000 per natural person. It would establish a form of direct
attribution and strengthen provisions for enforcement against
loopholes. These proposals would apply to the remainder of the 2002
Farm Bill.
NATIONAL ANIMAL IDENTIFICATION SYSTEM (NAIS)
Question. If States and private industry were to contribute the
same amount of funding as the Federal Government for the implementation
of the NAIS--$33 million per year in this budget request and in the
previous 2 years--would it be possible to maintain the implementation
timeline outlined in the Department's May 2005 Draft Strategic Plan
(i.e., full program implementation by January 2009)? If not, what
percentage of the total funding would have to come from outside the
Federal Government in order to have an animal ID system fully
operational by January 2009--would States and private industry be
responsible for two-thirds of the funding, or three-fourths, or more?
Answer. NAIS will be a fully operational system in early 2007 and
consist of three main components: premises registration, animal
identification, and animal tracking. Premises registration has been
implemented in all 50 States and 2 Territories. Several Tribes are also
registering their premises. In March, APHIS will begin distributing
animal identification numbers. We anticipate the remaining systems
elements will be operational in early 2007, but private entities will
need to supply information to fill the private databases.
Question. Does USDA have the authority under the Animal Health
Protection Act, or any other statute, to require a mandatory animal
identification program? Does the transfer of the animal-tracking
database to the private sector affect the Department's ability to
mandate participation as originally envisioned in the May 2005 Draft
Strategic Plan?
Answer. The Animal Health Protection Act provides authority to
issue regulations establishing a mandatory National Animal
Identification System. The inclusion of State or private animal
movement tracking systems within the NAIS would not alter the
Department's authority to mandate participation.
SERICEA LESPEDEZA
Question. Sericea lespedeza is an important Federal field crop in
the southeastern United States, but it is an invasive species in the
central plains States, including my home State of Kansas, as it
destroys the ecological balance of tallgrass prairie lands. Currently,
conservation efforts in Kansas' tallgrass prairie cannot sequester
USDA's assistance to find ecologically/economically compatible controls
for Sericea lespedeza because of its status as a Federal field crop
through APHIS. However, we need to address this critically important
issue affecting our prairie before it's too late.
How can we find a way to ascertain USDA's help in controlling this
destructive invasive species in Kansas while ensuring that these
methods of control do not compromise Sericea's production in the
southeastern United States? Would APHIS be open to providing varying
regional statuses for Sericea lespedeza?
Answer. There is no formal definition of a ``Federal field crop.''
APHIS' focus is on quarantine pests. The offending pest must be new to
the United States, or present but not known to be widely distributed in
the United States and currently under an active control program. S.
lespedeza has been in the country for more than a century and is in at
least 60 percent of the States. Consequently, it does not meet the
requirements of a quarantine pest.
However, regional effort is an option that could be pursued using
State statutes. Currently, Kansas is the only State that regulates S.
lespedeza as a State noxious weed.
______
Questions Submitted by Senator Herb Kohl
HORSE SLAUGHTER/USER FEES
Question. Meat inspection user fees have been proposed many times,
but have ultimately been rejected by Congress because the general
assumption was that statutory authorization was required before the
Department could collect fees. However, based on your recently
announced rule for fee inspection, and the subsequent court ruling,
USDA apparently CAN collect user fees without explicit statutory
language. Now that USDA lawyers assert that these fees can be
collected, it seems this dramatically changes the dynamic.
Can Congress assume that USDA still believes it has legal authority
to collect these fees?
Answer. User fees have been proposed for inspection under the
Federal Meat Inspection Act (FMIA), the Poultry Products Inspection Act
(PPIA), and the Egg Products Inspection Act (EPIA), because these
statutes only authorize user fees for overtime and holidays. The
Agricultural Marketing Act of 1946 provides USDA the legislative
authority to collect user fees for ante-mortem inspection of horses.
This authority also authorizes the collection of fees for other types
of voluntary meat and poultry inspection activities, including
inspection of species not covered by the FMIA.
Question. Since USDA prevailed in court on the question of fees for
horse inspection, does that same legal theory apply to other meat and
poultry inspections, including those activities for which user fees are
proposed in the budget?
Answer. Under the Agricultural Marketing Act of 1946 (AMA), USDA is
directed and authorized to provide, when requested, inspection of
eligible species on a fee-for-service basis. Such fee-for-service
inspections have long been provided by FSIS inspection program
personnel for other species not eligible for inspection or not eligible
to receive certain types of services under the FMIA. The AMA does not
provide the authority necessary to recover the costs of providing
inspection services under the FMIA, PPIA, or the EPIA.
Question. Is USDA still in favor of user fees as a way to pay for
meat and poultry overtime inspections?
Answer. Yes. USDA will continue to recover the costs of providing
overtime and holiday inspection through user fees. In addition,
legislation will be submitted to Congress to authorize fees to recover
the costs of providing inspection beyond a single approved primary
shift.
Question. Since the President's budget simply asks us to provide
$757 million for FSIS, can Congress assume that you will be able to
support all FSIS activities through the new user fees you propose
whether or not the authorization committee takes action? If not, what
is your contingency plan--what's going to get cut?
Answer. The President's 2007 budget requests $863 million, the full
amount of budget authority needed to operate FSIS' inspection services.
We are requesting authority to charge user fees, deposit the fees into
special receipt accounts, and use the fees subject to appropriations.
FOOD SAFETY BUDGET TRENDS
Question. According to an OMB document published on January 23rd,
fiscal year 2008 budget for FSIS decreases by $27 million from the
fiscal year 2007 proposed level, and that trend continues.
Should we be prepared for a trend in requesting fewer dollars for
food safety activities? If these decreases on this OMB document
actually occur over the next 5 years--one analysis maintains that it
will equal a 17 percent cut--what activities are going to suffer?
Answer. The fiscal year 2007 budget documents include estimates for
fiscal year 2008 and beyond that reflect the President's commitment to
reduce the Federal deficit in half by fiscal year 2009. These out-year
estimates are computer generated using set formulae that do not reflect
policy decisions. No conclusion on the administration's priorities for
food safety or other USDA activities should be drawn from these
numbers.
COMMODITY SUPPLEMENTAL FOOD PROGRAM
Question. How much carryover did CSFP have at the end of fiscal
year 2005?
Answer. At the end of fiscal year 2005, the Commodity Assistance
Food Program (CSFP) had a carryover amount of $118,000.
Question. How much will be used to help fund the fiscal year 2006
Shortfall? If this will not occur, please explain the reasoning,
especially since the budget proposes to eliminate the program next
year, making carryover into 2007 unnecessary.
Answer. All of the fiscal year 2005 carryover funds will be used in
2006. We plan to use all of the fiscal year 2005 funds in 2006.
Question. What is the status of the $4 million additional funding
provided for CSFP in the last supplemental? Could this be used to help
the fiscal year 2006 shortfall? If not, why?
Answer. The supplemental assistance will be offered to the three
Gulf-area CSFP States that were directly affected by the hurricanes
(Louisiana, Mississippi and Texas). These three CSFP States have the
vast majority (over 93 percent) of all disaster assistance applicants.
The assistance will be provided in the form of caseload, administrative
funds, and commodities.
The supplemental funding cannot be used to make up the fiscal year
2006 shortfall. The legislation that provided the supplemental funding
to CSFP requires that the supplemental funding be used ``for necessary
expenses related to the consequences of Hurricane Katrina . . . .''
Therefore, these funds cannot be used to restore caseload to all CSFP
States.
Question. Has there ever been a full evaluation of the CSFP, other
than the administration's PART review, which stated that CSFP was a
good alternative to the Food Stamp Program for senior citizens? If not,
why wasn't one planned or carried out before this elimination?
Answer. There is very limited information on the impact of the CSFP
on participants' nutrition and health status, and no evaluation of
which we are aware that characterized the program as a good alternative
to the Food Stamp Program. A 1982 evaluation examined administrative
and medical records data from 3 CSFP sites and found positive impacts
for pregnant women and suggestive evidence of positive impacts for
children. However, the program has changed substantially since this
study was done. In particular, it did not include the elderly, who now
account for about three-fourths of program participants.
In 2005, the Economic Research Service began a study to examine
participation and administrative issues related to the CSFP, including
how CSFP fits into States' overall designs to address food insecurity
among target populations, why some States choose not to participate,
and who among those eligible tends to participate. The study will be
published in early 2007.
Though questions have been raised about the effectiveness of CSFP,
other important factors influenced the administration's decision to
eliminate program funding. The key consideration influencing this
decision is that the program is not available nationally and is
substantially redundant of other nutrition assistance programs that are
available nationally.
In the administration's view, ensuring adequate funding for
programs that have the scope and reach necessary to provide access to
eligible people wherever they may reside is a better and more equitable
use of scarce resources than to allocate them to programs that cannot
provide access to many areas of the country. For this reason, the
administration has placed a priority on funding the Food Stamp, WIC,
and other nationally-available programs that provide benefits to
eligible people wherever they may live.
Question. How many senior citizens do you estimate will be
ineligible for the Food Stamp Program, or may choose not to participate
for other reasons?
Answer. Based on the best-available national information on the
circumstances of all low-income elderly, we estimate that about 101,000
elderly CSFP participants will not be eligible for food stamps, largely
because they hold countable assets that put them over the Food Stamp
Program's resource limit. Our budget request assumes that 88,000 CSFP
participants will make the transition to food stamps and that about
118,000 will choose not to even though they are eligible. We are
prepared, however, to use the requested food stamp benefit reserve if
necessary to support participation by all who are eligible. We have
also requested $2 million for outreach to encourage elderly CSFP
participants to participate in Food Stamps.
Question. What is the average market value of the food boxes
received in the CSFP program by seniors, and how does that compare to
the $20 in temporary assistance you are offering to provide?
Answer. We estimate that a CSFP food package for elderly
participants would have a retail value of approximately $42.35, on
average, if purchased at retail prices in 2005. However, this cost
could vary greatly depending on type, brand, etc. of foods in the
package. In comparison, the average food stamp benefit for a senior
living alone was $65 per month in 2004.
GIPSA OIG AUDIT
Question. I know that USDA is taking specific actions to try to fix
all of the problems identified in a recent OIG audit of GIPSA. However,
in 1997 and in 2000 GIPSA was reviewed and changes were suggested, but
problems weren't fixed.
Why will this time be different? How will you regain the confidence
of the markets GIPSA is supposed to protect?
Answer. GIPSA intends to restore confidence by implementing all
recommendations in the OIG report. GIPSA has already issued policy
directives in response to several of the recommendations and is
initiating a review process to ensure that the directives are being
followed and implemented properly.
However, GIPSA has gone further than just the OIG recommendations.
For example, the agency has requested a full scale organizational
review to provide recommendations on how to improve the agency's
operational effectiveness. Also, the new GIPSA Administrator recently
ordered an Office of Personnel Management-administered Organizational
Assessment Survey. The survey gives employees an anonymous opportunity
to let the Administrator know what they think about the organization on
a range of topics. Results will be used to make decisions about work
environment improvements in the program and enhance its organizational
effectiveness. The Administrator is also working to develop an
organizational culture to ensure at all levels a recommitment to OIG
and GAO recommendations and to redirect resources to achieve mission-
critical activities.
Question. On January 24th, I sent a letter to the Justice
Department's Special Counsel for Agriculture, with a copy to USDA,
encouraging them to work with you to prevent anti-competitive market
conditions--especially while GIPSA is still working to improve its
efforts. Have you, or anyone from USDA, been in touch with the Justice
Department? Do you plan to work with them?
Answer. USDA has undertaken a number of initiatives related to
working with the Department of Justice (DOJ). First, an economist from
GIPSA's Industry Analysis Division, has been detailed to work at DOJ
for 4 months on a case. GIPSA is also currently working in
collaboration with DOJ on an anti-competitive investigation. Finally,
GIPSA has a memorandum of understanding between the Office of General
Counsel (OGC) at USDA and DOJ in place. Already DOJ and OGC are
coordinating on relevant issues where warranted.
Question. Since this report came out after the budget was written,
do you now think you need additional resources in order to implement
all of OIG's recommendations?
Answer. GIPSA is conducting an evaluation of program resources. If
changes to resources are needed, they will be taken into consideration
for the 2008 budget request.
SMALL FARM/DIRECT MARKETING
Question. Can you point to any actions USDA has taken recently to
help small producers work through regulatory problems that might stifle
their ingenuity? Last year we provided funds for a new program to help
promote farmers markets and other outlets for small producers, but they
are not included in your budget.
Answer. USDA has many programs that enhance the reliability and
economic livelihood of small farmers and ranchers across America.
Through these programs we actively encourage the growth and
continuation of small, limited-resource, and minority farmers and
ranchers, as well as local communities. Through outreach, research,
market development, financial support, and technical assistance we are
helping them compete.
In January 2006, USDA issued its third progress and achievement
report entitled ``Making a Difference for America's Small Farmers and
Ranchers in the 21st Century.'' This report highlights USDA's
continuing efforts to assist the Nation's small farmers, ranchers, and
farm workers. It identifies the major achievements and continuing
actions taken by USDA in response to the 8-policy goals and 146
recommendations included in the USDA National Commission on Small
Farms' report, A Time to Act.
The Farmers Market Promotion Program is included in USDA's fiscal
year 2007 budget. Following Congressional approval of funds for the
administration of the Farmers Market Promotion Program for fiscal year
2006, USDA has been rapidly implementing this grants program through
the Agricultural Marketing Service. The program is designed to
facilitate and promote farmers markets and other direct-to-consumer
marketing channels for farm products. By the end of fiscal year 2006,
AMS will administer approximately $1 million in grants, with a
statutory maximum of $75,000 per grant, to eligible entities. A Notice
of Funds Availability for the Farmers Market Promotion Program was
published in the Federal Register on March 15, 2006. The Notice invites
eligible entities to submit project proposals to AMS by May 1, 2006.
Eligible entities include agricultural cooperatives, local governments,
non-profit corporations, public benefit corporations, economic
development corporations, regional farmers' market authorities, and
Tribal governments. Grants will be awarded on a competitive basis
following a comprehensive internal review.
Question. What initiatives have you proposed to assist small
farmers, to encourage their creativity, and to help American farmers
remain independent?
Answer. USDA's budget for fiscal year 2007 proposes to continue the
Farmers Market Promotion Program, which is designed to facilitate and
promote farmers markets and other direct-to-consumer marketing channels
for farm products. In addition, AMS offers technical assistance useful
to small farmers through its ongoing Wholesale, Farmers, and
Alternative Markets and Transportation Services programs. Examples of
recent initiatives include the creation of a Farmers Market Consortium
in November 2005, bringing together Federal agencies and private
foundations that support development of farmers markets which has
already produced and released a Farmers Market Resource Guide in March
2006. Also, the Federal-State Marketing Improvement Program offers
grants that encourage creative solutions to local and regional
agricultural marketing challenges.
BSE--JAPANESE EXPORTS
Question. One of the things USDA is doing in response to the recent
shipment of banned material to Japan is re-training the FSIS inspectors
to make sure this never happens again.
What is the status of that training, and what, exactly does it
entail?
Answer. On January 23, 2006, USDA's Food Safety and Inspection
Service (FSIS) conducted interactive web-based training for its
inspection program personnel at Export Verification (EV)-approved
establishments. All FSIS inspection program personnel currently
assigned to an establishment with an approved EV program completed the
on-line training course by March 21, 2006.
FSIS inspection personnel are provided computer-based follow-up and
supplemental training. Inspectors who rotate into any establishment
that produces product that is subject to EV requirements will also
undergo training. All new employees hired after March 2006 will receive
training.
FSIS' EV training reviews policies pertaining to Export
Certification, Re-Inspection of Product intended for Export, and
Certifying Beef Products under the EV Programs and all pertinent Export
Directives.
To be certain that FSIS inspection program personnel are fully
aware of specific products approved for export to countries
participating in EV programs, the Agricultural Marketing Service (AMS)
will maintain a list of specific products approved for export to each
country on an internal Web site accessible to FSIS-trained inspection
program personnel. AMS will also notify FSIS each time establishments
are audited, listed or delisted for EV programs.
NON-AMBULATORY DISABLED CATTLE
Question. A recent OIG report on BSE surveillance notes that there
has been some confusion regarding what constitutes a ``downer'' animal.
I understand that the number of times this happened is extremely low--
less than 50, I believe, out of all of the animals processed during the
time of enhanced surveillance. However, I also understand the effect
that even one case of BSE can have on our markets.
What steps is the Department taking in order to provide a more
clear description of what animals are to be considered ``downers''?
Answer. On January 12, 2004, USDA issued an interim final rule
which includes requirements for the disposition of non-ambulatory
disabled cattle. The preamble to the rule States, ``FSIS is requiring
that all non-ambulatory disabled cattle presented for slaughter be
condemned'' (Docket No. 03-025IF, Federal Register, January 12, 2004).
The rule has not changed. However, in those extremely rare instances
when a cow suffers an acute injury after passing ante mortem inspection
and becomes non-ambulatory, the cow is not automatically condemned.
Under an FSIS notice issued January 18, 2006, the animal is tagged
as ``U.S. Suspect'' (FSIS Notice 05-06). The ``U.S. Suspect''
designation was not created for this rare situation, but is a long-
standing practice. Inspection program personnel conduct careful ante
mortem reinspection of animals so designated. Pursuant to the notice,
Public Health Veterinarians (PHVs) perform an examination on these
animals to ensure that the injury is acute and not the result of a
chronic condition. If there is any evidence of a chronic condition, or
if the PHV cannot be sure the injury was not caused by a chronic
condition, the notice provides that the animal is to be condemned.
A previous notice, issued on January 12, 2004, addressed this rare
situation but did not provide for tagging. The application of a ``U.S.
Suspect'' tag will help the Agency to better track occurrences in which
acute injuries occur after ante mortem inspection at the slaughter
plant.
All cattle tagged ``U.S. Suspect'' are eligible to go to slaughter.
The ``U.S. Suspect'' designation indicates that the animal needs closer
postmortem examination, and consequently the PHV makes the final
postmortem disposition of every ``U.S. Suspect'' animal. All cattle
designated as ``U.S. Condemned'' are banned from entering the slaughter
establishment.
Question. Is additional training or information being provided to
your inspectors in this regard?
Answer. Public Health Veterinarians (PHVs) have the requisite
veterinary medical education to distinguish between chronic conditions
and acute injuries. A significant part of PHV training is dedicated to
determining acute versus chronic conditions. A chronic disposition
often leads to condemnation because the condition is ongoing, whereas
an acute condition would likely lead to condemnation of part of the
animal.
BSE--JAPANESE EXPORTS
Question. I understand that as part of the ``verification'' program
set up to ship beef to Japan, two signatures are required to ensure
that the shipment does indeed meet Japanese requirements.
Are both of these signatures from FSIS employees?
Answer. As the result of the January 20, 2006, discovery of three
boxes of veal with vertebral column shipped from the United States, in
violation of the terms of our Export Verification (EV) agreement with
Japan, I announced 15 Action Steps, including the requirement of an
additional signature during the EV process. Both the Agricultural
Marketing Service (AMS) and the Food Safety and Inspection Service
(FSIS) share the responsibility to confirm shipments for the EV program
and employees from both agencies sign the documentation.
Question. Do both verification form signatories physically check to
make sure the shipment meets the proper standards?
Answer. FSIS and AMS both have specific responsibilities for
confirming that shipments meet the appropriate EV standards. These
responsibilities do not require the signatories to physically check the
shipment.
AMS confirms that both the establishment and products are approved
for export to the importing country.
FSIS certifies and signs that all food safety requirements have
been met. When signing an export certificate, an FSIS certifying
official should receive the following from an establishment: (1) the
original FSIS Form 9060-5, Meat and Poultry Export Certificate of
Wholesomeness; (2) any other certificates required by the importing
country; and (3) a copy of the letter from AMS that confirms that AMS
conducted a review and that AMS has determined the items listed are
approved for export to the country listed on the certificate and from
the facilities listed.
If all documents are acceptable, the FSIS certifying official will
sign all certifications and maintain a copy of the AMS letter in the
government file along with the certifications.
Question. What steps is USDA taking to try to make the regulatory
market more streamlined, as opposed to wide variety of requirements for
each country to which we export?
Answer. Most market openings (with the exception of Japan, where
the terms of the market opening were negotiated in October 2004) have
been for boneless beef from cattle under 30 months of age. The terms of
these market openings were guided largely by international guidelines
as maintained by the World Organization for Animal Health (OIE) and by
precedents set by major importers, including the terms that the United
States applies to imports from other countries that have experienced
BSE. While these openings have resulted in a number of different import
requirements by country, these requirements were negotiated with the
full cooperation and knowledge of the U.S. industry with the intention
of getting back into the market as quickly as possible with at least
some product and the understanding that greater access would be
negotiated at a later date. In our current negotiations USDA is pushing
for broader access for U.S. beef overseas, arguing that OIE guidelines
permit more favorable access than boneless/under 30 months.
Question. I also understand that in this recent case of banned veal
being sent to Japan, the inspector was an online inspector who was,
according to FSIS regulations, not authorized to do the final
inspection on this beef. Is this accurate?
Answer. No, this is not accurate, because the inspector was
authorized to do the final inspection of this beef. The problem arose
from USDA inspection program personnel and the Japanese importer lacked
familiarity with USDA's bovine export verification (EV) requirements
for Japan.
Question. What steps are you taking to prevent this from happening
again, and to ensure that there are a sufficient number of offline
inspectors to prevent online inspectors from having to perform duties
they are not officially authorized to do?
Answer. The problems have been identified and appropriate actions
have been taken. The problem was not related to an online inspector
conducting activities that person was not authorized to perform.
Rather, the problem was related to USDA inspection program personnel
and the Japanese importer lacking familiarity with USDA's bovine EV
requirements for Japan. In response to this incident, the
establishments involved were immediately removed from the approved
list, and extensive training has been conducted with all involved FSIS
inspection program personnel. AMS and FSIS also have strengthened
coordination between their personnel. Eligibility of both the
establishment and the products for export must be confirmed by AMS
prior to FSIS certifying export documents.
ALTERNATIVE FUELS
Question. Mr. Secretary, I believe you agree that American
Agriculture has a strong role to play in energy development, so please
explain why USDA's investments in this area are going down instead of
up.
Answer. The fiscal year 2007 Budget supports an estimated $345
million in loans, grants, research and other support for energy
projects. These funds will support investments to encourage additional
biofuels production, develop improved feedstocks and efficient
conversion technologies and increase energy efficiency. The bioenergy
incentives program, funded at $60 million in 2006, expires at the end
of 2006.
Question. What is the status of new technology and knowledge about
feed stocks that U.S. farmers and rural business people can use to
provide new, cleaner, and less costly, sources of energy for this
country?
Answer. Progress is being made on the development of technologies
for converting cellulosic biomass to useable energy. Commercial pilot
facilities for fermenting agricultural residues such as wheat straw and
corn stover to ethanol are either operational (Iogen--Ontario, CA) or
under construction (Abengoa--York, Nebraska).
Companies are also scaling up new technologies for gasifying
biomass and producing methane. For instance, Frontline Bioenergy (Ames,
Iowa) and Chippewa Valley Ethanol Corporation (CVEC--Benson, Minnesota)
announced that construction will begin this year on a facility to
gasify distillers dried grains, and eventually corn stover. Their
gasification unit will eventually displace over 90 percent of the
natural gas now used at CVEC's Benson site. And Viresco Energy
(Riverside, California) plans to build a pilot plant to gasify a
mixture of coal and wood. Technology also exists to convert the product
gas from biomass gasification to methanol or diesel fuel.
Technology is also being developed to pyrolyze biomass at or near
the farm and produce an energy-dense bio-oil. The bio-oil could then be
transported to a central refinery for conversion into hydrogen, diesel
fuel or even gasoline.
In spite of this progress, however, significant technology
development is needed before a sizable industry for producing energy
from agricultural and/or woody biomass can be realized.
Question. What are USDA research and development programs doing to
assist that effort?
Answer. The Agricultural Research Service (ARS) has a number of
programs to develop technologies that will enable the growth of a
sizable industry for producing energy from agricultural and/or woody
biomass.
--ARS-Peoria, IL has a number of projects for improving the
efficiency of fermenting cellulosic biomass to ethanol.
--ARS-Lincoln, NE and a number of other ARS facilities are involved
in a critical project to understand the long-term impact of
harvesting crop residues, such as corn stover, on farm soils.
--ARS-Albany, CA is working to sequence the genome of switchgrass,
and to develop genetic tools for breeding new varieties of
switchgrass with superior traits as an energy feedstock.
--ARS-Corvallis, OR and ARS-Wyndmoor, PA have partnered with the
Western Research Institute to develop a portable gasifier for
converting wheat and grass-seed straw into methane, rather than
burning these residues in the field as is currently practiced.
--ARS-Wyndmoor, PA and ARS-University Park, PA are field-testing a
portable gasifier for switchgrass.
--ARS-Florence, NC is developing a proposed program to gasify manure
wastes into methane, thereby eliminating effluent lagoons and,
at the same time, generating useful fuel.
--ARS-Albany, CA is developing a proposed program to investigate the
fundamental, biological mechanisms involved in the production
of cell walls, the component of plants that is the basis of all
ligno-cellulosic biomass. This research is necessary to enable
the breeding of new plants that will significantly lower the
cost of biomass-derived energy.
Additionally, CSREES, through the National Research Initiative's
Biobased Products and Bioenergy Production Research Program, supports
activities which expand science-based knowledge and technologies that
support the efficient, economical and environmentally friendly
conversion of agricultural residuals into value-added industrial
products and biofuels.
______
Questions Submitted by Senator Tom Harkin
USDA SERVICE CENTERS
Question. Since 1993, the county-based agencies have been
implementing streamlining plans to cut red tape and co-locate offices
in the same county, with the goal of providing one-stop service for
USDA customers. However, we have also witnessed the erosion of this
customer service objective, first with the replacement of local USDA
Rural Development offices with area offices that serve multiple
counties and more recently with the Farm Service Agency directive to
State offices to identify offices that can be closed and consolidated.
If it is necessary to consider consolidating local offices, isn't
it appropriate to consider the convenience of keeping together all
agency services related to customer needs in any specific Service
Center?
Answer. USDA utilizes the State Food and Agriculture Councils
(SFACs) to provide a cross-agency, decision-making and communication
forum for administering programs at the local level. We are encouraging
FSA, NRCS, RD and all other agencies to work together in a spirit of
cooperation to work with the SFACs to achieve the optimum network of
local offices, staffing, training and technology.
USDA is committed to delivering farm program services through the
Service Center model and is exploring all ``shared space''
opportunities where multiple USDA agencies can share space, supplies,
mailroom, printing, conference room, common computer facilities, and
basic office equipment.
USDA is committed to a continued dialogue with State and
congressional leaders to discuss how best to modernize the FSA county
office system and the necessary steps required to improve its
information technology (IT) infrastructure. The ultimate goal of this
process is to increase the effectiveness of FSA's local offices by
upgrading equipment, investing in technology and providing personnel
with critical training. We are committed to working with our partners
to ensure that America's farmers and ranchers continue to receive
excellent service long into the future.
Question. Why hasn't USDA approached this as a Service Center issue
rather than a decision by just one of USDA's agencies?
Answer. Each USDA agency is faced with individual resource concerns
as well as infrastructure problems. Although many p our customers are
the same, each agency also has distinctly different clientele. As you
note, the Service Center Agencies already maintain different office
structures. For example, in your State of Iowa, Rural Development
maintains a network of 10 area offices while FSA maintains a presence
in all 99 counties of the State.
However, USDA is committed to delivering farm program services
through the Service Center model and is exploring all ``shared space''
opportunities where multiple USDA agencies can share space, supplies,
mailroom, printing, conference room, common computer facilities, and
basic office equipment.
Question. How is the Department coordinating the multiple mission
areas of local Service Centers?
Answer. State Food and Agriculture Councils (SFACs) are the primary
vehicles for administering programs at the local level. SFACs provide a
policy-level, cross-agency, decision-making and communication forum to
achieve USDA's goals and objectives.
Furthermore, the Farm Service Agency (FSA) State Executive
Directors (SEDs) are currently conducting local-level reviews of the
efficiency and effectiveness of FSA offices in each State. The SEDs and
State committees are forming review committees to better identify what
the optimum network of FSA facilities, staffing, training and
technology should be for each State within existing budgetary resources
and staffing ceilings. Each SED is also exploring potential joint-
effort opportunities with the Natural Resources Conservation Service
and other USDA agencies.
COMMON COMPUTING ENVIRONMENT
Question. The objective of the Service Center Modernization
Initiative is to create an environment of one-stop quality service for
customers of the Farm Service Agency, the Natural Resources
Conservation Service, and the Rural Development agencies. The Common
Computing Environment (CCE) is intended to enable the 3 agencies to
share information technology to improve customer service. Since fiscal
year 1996, USDA has been planning and deploying an integrated
information system to replace several old systems in Service Center
Agencies that could not share data. In March 2000, the Office of Chief
Information Officer was given direct management responsibility for the
CCE.
Given that this effort has been underway for 10 years, has USDA
made sufficient progress in reaching the objective number of shared
information technology and ability to share and transfer data?
Answer. USDA has made significant progress in reaching the shared
information technology objectives. The shared technology platform, the
Common Computing Environment (CCE), is in place. The platform allows
USDA to maintain one standardized environment for use by the Service
Center Agencies (SCAs). The platform is the foundation for on-going
efforts to modernize individual SCA systems and business processes.
Despite the fact that full modernization has yet to be achieved, the
platform has provided several administrative and technological
benefits. Examples of the benefits have been provided.
[The information follows:]
Common Administrative Functions
Common computer technology on each of 50,000 agency and
contributing partner desks, including shared software;
Shared networks, making higher speed connectivity affordable for
the SCAs; and
Common IT security with the capability to manage from a single
operation nationwide.
Centralized Computing Technology
Shared Storage Area Network (SAN) technology (5 locations) for
tabular and geospatial data and backup/disaster recovery (full
redundancy);
Common eAuthentication portal for user validation in the SCAs; and
Web Farm Technology (consolidated IT locations) developed and
deployed to support Web access for employees and customers.
Telecommunications Architecture and Operations
Maintenance for phones and network routers and upgrades to data
network and technology to meet future demands; and
Transition to the Departments Universal Telecommunications Network
(UTN)--component of the USDA Enterprise Architecture in fiscal year
2006.
USDA Data Center
Data acquisition for Geographic Information Systems (GIS)--
examples: Common Land Use (CLU) data for FSA, Soils data for NRCS; and
Data acquisition for aerial/high altitude imagery for mapping and
compliance review--example: NAIP photography.
Question. How has the cost of the common computing environment
been allocated among program areas?
Answer. The cost of the Common Computing Environment (CCE) is
allocated across the three Service Center Agencies. A formula based on
the number of computers an agency has connected to the CCE network was
derived for the allocation of $19,538,000 for base infrastructure. For
fiscal year 2006, FSA has 40 percent of the computers, NRCS has 39
percent, and RD has 21 percent. Agency-specific and interagency funds
account for the remainder of the CCE costs. These funds are:
$73,260,000 (FSA-specific), $11,025,000 (NRCS-specific), $3,960,000
(RD-specific), and $1,188,000 (Interagency eGoverment).
Question. Is there any evidence that producers have begun to
embrace the web-based system of program delivery?
Answer. The Service Center Agencies (SCAs) have begun to see
increased producer interest in Web-based program delivery. Examples of
this interest have been provided.
[The information follows:]
As of March 1, 2006, over 32,000 producers have obtained an
eAuthentication Level 2 ID. This credential is required to access,
sign, and electronically submit loan applications and to review the
combined customer statement that uses data from each of the SCAs.
For the 2005 crop year, Service Centers used the Web-based
Electronic Loan Deficiency Payment (eLDP) system to process about 87
percent of the LDPs. As of March 23, 2006, over 1.287 million
applications have been processed, resulting in the payment of over
$4.258 billion. Of these, 16,630 eLDP applications were submitted
directly from producers resulting in the payment of $75.9 million.
Nearly 5,800 producers self-enrolled for the Electronic Direct and
Counter Cyclical Payment Program (eDCP) for the 2005 crop year. As of
March 21, 2006, FSA has enrolled over 1.35 million contracts for the
2006 crop year with nearly 10,000 producers enrolling electronically.
Over 1,700 FSA customers regularly conduct business via the eForms
Web portal. Electronic forms submission has grown from 54 in fiscal
year 2002 to 2,965 in fiscal year 2005.
The NRCS Soil Data Mart is averaging 12,000 downloaded soil surveys
and 17,800 online reports viewed per month. In addition, about 1,400
users per day are using the Web Soil Survey, saving staff time at the
Service Centers.
CROP INSURANCE
Question. The Group Risk Insurance Plan (GRIP) has grown by leaps
and bounds over the past 2 years because of the perception held by
farmers that they have a better chance of collecting an indemnity with
a GRIP policy than a standard yield or revenue product. Many critics of
GRIP claim that the product, in its present form, does not work like
insurance but like a lottery. They allege that, under this program, a
farmer could experience a significant loss but not be due an indemnity
payment. The exact opposite scenario could also be true--the policy
could pay farmers an indemnity even though they have a bumper crop. I
am told that these situations have already occurred.
Has RMA looked into the question of how common these overpayments
or underpayments relative to actual crop losses on a specific farm
actually are, and if so, what has the Agency found?
Answer. The Group Risk Income Protection (GRIP) plan of insurance,
as with Revenue Assurance (RA) and Crop Revenue Coverage (CRC), is
designed to protect growers against an unexpected decline in revenue,
not merely against a yield shortfall. GRIP indemnities are triggered by
the declining value of the harvest not the quantity harvested. This is
important because indemnities can be triggered by large price declines
even as the producer harvests a bumper crop. Likewise, a producer could
have significantly reduced yields but not receive an indemnity if a
large price increase moderates the loss of revenue.
RMA has not specifically studied the performance of the GRIP plan
of insurance; however, the agency contracted for an outside study of a
related product, the Group Risk Protection (GRP) program. This review
addressed the question about GRP's effectiveness in reducing a grower's
risk. The results are relevant for GRIP because it uses the same yield
data for determining guarantees and indemnities. The external review
found that:
--GRP, on average, provides substantial risk reduction to growers.
--GRP tends to be more effective where individual yields are more
homogenous across the county.
--GRP tends to be more effective in the major production regions.
Question. Could the problem be addressed by re-rating the policies
or acquiring more accurate information about county-level yields?
Answer. The potential for a grower to receive an indemnity when he
or she did not suffer a loss, or vice-versa, is inherent to a group
based policy. This cannot be changed by re-rating. However, accurate
information about county level yields is important to the performance
of GRP and GRIP. Consequently, GRP and GRIP is limited to those
counties with at least 30 years of NASS yield history and a minimum
threshold for number of growers. NASS county yield estimates are likely
to be the most accurate in these counties.
To ensure that the GRIP program is functioning as intended, an
outside review will be conducted during this year.
Question. Should USDA or Congress consider revoking the authority
to offer this type of insurance coverage?
Answer. No, the authority to offer group products should not be
revoked. Group-based coverage offers a reasonable alternative to the
individual-based policies. In some cases, such as for pasture and
rangeland, group coverage is the only viable method for offering
meaningful crop insurance. Many growers find that group-based products
provide effective risk management protection at a significant cost
savings relative to individual plans of insurance.
Question. In both 2005 and 2006, the President's budget proposed to
cut funds for the Federal crop insurance program to the tune of $130
million annually, cutting both to the premium subsidies provided to
farmers who buy crop insurance and payments to the private companies
that deliver crop insurance to farmers.
Has USDA or any other government agency ever conducted an analysis
of the effect on the crop insurance program were those cuts to be
implemented?
Answer. Yes, the administration's 2007 budget proposal would link
the purchase of crop insurance to the participation in farm programs,
such as the direct and counter-cyclical payment programs. This proposal
would require farm program participants to purchase crop insurance
protection for 50 percent, or higher, of their expected market value or
lose their farm program benefits. Currently participation in crop
insurance is voluntary; however, producers are encouraged to
participate through premium subsidies, which currently average about 59
percent of the total premium. By linking crop insurance to other farm
programs, we anticipate that an estimated 20 million additional acres
would be brought into the crop insurance program. We also anticipate
that insurance companies would benefit from this feature via increased
business and potential underwriting gains. I will provide additional
details.
[The information follows:]
To offset the increased costs stemming from the increased crop
insurance program participation, several proposals are made for
garnering savings. One proposal is to reduce premium subsidies by 5
percentage points for coverage levels of 70 percent or below and 2
percentage points for coverage levels of 75 percent or higher. The
primary impact of this feature falls on producers who would be required
to pay a larger share of the premium. It is expected that a small
number of producers would move to a lower level of coverage to offset
the higher costs. Another change being proposed is to reduce the
delivery expense reimbursement rate by 2 percentage points for all
policies above the CAT level of coverage. The proposal would also
adjust the administrative fees required to obtain CAT coverage to make
the fee more equitable between small and large producers. Lastly, the
proposal would increase net book quota share to 22 percent (from the
current 5 percent). This proposal would require the participating
companies to ``reinsure'' 22 percent of their retained premium with the
Federal Government rather than with commercial reinsurers. As an
offset, the companies would receive a 2 percent ceding commission. In
recent years, the companies have been retaining about 80 percent of the
premium, for which they received almost $3.6 billion in aggregate
underwriting gains between 1996 and 2005. Over this period, the
companies have sustained an underwriting loss in only 1 year (2002),
and that underwriting loss was less than $45 million. In 2005 alone,
the companies are expected to receive an underwriting gain of
approximately $900 million. Conversely, the Federal Government has
experienced underwriting losses of about $1.6 billion over this period
on the remaining 20 percent of business the companies have ceded back
to USDA.
Question. Has any outside consultant been hired to conduct such an
analysis?
Answer. RMA has not contracted with any outside consultants for a
study of the potential impacts of the proposed program changes.
Question. If there is such an analysis, I would like to be provided
a copy of it. If no such analysis has been conducted, how does USDA
know that these cuts would not be deleterious to the crop insurance
program?
Answer. The proposed reductions in premium subsidies to producers
and payments to companies are relatively small. The anticipated cost
savings are shared equitably among producers and companies and are
necessary to offset the additional costs of increased participation in
an era of ever-tightening budgets. For purposes of the proposal, the
linkage requirement was assumed to increase total acreage in the
Federal crop insurance program by an estimated 20 million acres, for a
participation rate of about 84 percent. This is essentially the same
level of participation achieved in 1995. However, the structure of the
current farm program is substantially different from that which existed
in 1995, in particular because of the availability of direct payments.
It is likely that the availability of direct payments could result in
participation that is somewhat greater than that assumed and
experienced with the previous linkage effort.
If enacted, the administration's proposal should result in a
substantial increase in total premium volume due to (1) CAT
policyholders moving to a buy-up level of coverage, and (2) the
addition of an estimated 20 million currently uninsured acres to the
program. With this increase in premium volume, companies should
experience greater economies of scale, thereby lowering their per-
policy costs of delivering the program. At the same time, delivery
expense reimbursements on the larger premium volume will offset much of
the impact of the reduction in the reimbursement rate. Similarly,
larger overall underwriting gains (on the higher premium volume) will
offset much of the increase in the net book quota share. Further, if
more than 20 million acres are added to the program, it is possible
that total payments to companies could in fact increase under this
proposal.
TRADE
Question. Last year, the U.S. agricultural trade surplus (exports
minus imports) was only $3.5 billion, the lowest figure since 1959.
However, the President's fiscal 2007 budget proposes to cut the main
USDA trade promotion program, the Market Access Program (MAP), by 50
percent from its Farm Bill level.
In light of the disappearing trade surplus, how can you justify
such a cut?
Answer. The proposal to limit funding for the Market Access
Program in 2007 reflects the administration's efforts to reduce the
Federal deficit. Reducing the deficit is a key component of the
President's economic plan and will help to strengthen the economy and
create more jobs. Farmers, ranchers, and other residents of rural
America understand the importance of a healthy economy, which raises
incomes and increases demand for their products. This and other deficit
reduction measures will contribute to a more prosperous future for our
citizens.
It should be noted that, even if the program is limited to $100
million in 2007, that level is still higher than the $90 million
program level that was authorized for MAP prior to the last Farm Bill.
Also, limiting the program will result in better targeting of the
assistance to those products and organizations that have the greatest
need for it and can use it most effectively.
With regard to the balance of trade, U.S. agricultural exports are
expected to reach a record high of $64.5 billion in 2006 and have grown
22 percent since 2001. During the same period, agricultural imports
have also grown. However, import growth over the past decade has been
in processed foods and beverages, not farm products. As such, a lower
agricultural trade surplus does not signal reduced export
competitiveness of the farm sector, but rather American consumer
preference for a wide variety of foods and vegetables, including those
from foreign suppliers.
Question. If that proposed cut to MAP were to be adopted by
Congress, how would USDA plan to implement it by cutting equally from
all U.S. cooperators in MAP, or by dropping some participants from the
program?
Answer. USDA would not be required to implement any changes to the
current funding allocation process if the proposed limitation on MAP
funds were adopted by Congress. MAP funds are allocated to program
applicants using a competitive process involving quantitative,
performance-based criteria that are published in the Federal Register
each year. Changes in program participation would reflect the results
of that competitive process and cannot be predicted accurately in
advance.
FOOD AID
Question. If the President's proposal to zero out funding for the
Public Law 480 Title I concessional loan program were to be enacted,
that would mean that a portion of those funds are no longer available
to transfer to the Food for Progress program.
For each of the past 5 years, how much money has been transferred
from Title I to the Food for Progress program?
Answer. We will submit for the record a table that provides the
amount of annual Public Law 480 Title I funding that was allocated to
Food for Progress programming during each of the past 5 years.
[The information follows:]
------------------------------------------------------------------------
Millions of
Fiscal year dollars
------------------------------------------------------------------------
2001.................................................... 77.7
2002.................................................... ..............
2003.................................................... 88.6
2004.................................................... 86.3
2005.................................................... 67.9
------------------------------------------------------------------------
Question. What would the loss of those funds mean in terms of lost
or cut-back programs on the ground in developing countries,
particularly in terms of numbers of targeted recipients?
Answer. The impact of the reduction in Title I funding for Food for
Progress programming would be mixed. USDA would need to reduce the
number of Food for Progress programs by 5-10 projects. Up to 50,000
beneficiaries could lose the benefits of the agricultural development
projects. However, the increase in funding proposed for Public Law 480
Title II would offset that reduction. The additional funding for Title
II would increase the number of beneficiaries under that program, who
suffer from critical food aid needs. The additional recipients under
the Title II program would likely exceed 50,000 in number and thereby
fully offset the reduced number under Title I-funded Food for Progress.
AVIAN INFLUENZA
Question. The Department of Agriculture (USDA) has requested a
total of $82 million to prepare for and prevent outbreaks of avian
influenza in the United States. These resources include various
domestic activities, such as wildlife surveillance, diagnostics, and
emergency preparedness. I am concerned about providing adequate support
and resources to State and local entities, such as State departments of
agriculture and animal health care workers, to be used to prepare for a
potential large scale avian influenza outbreak.
What is the total amount of funds from USDA that will go to States
to plan and prepare for an avian influenza outbreak?
Answer. Currently, APHIS is working with other Federal agencies,
States, and industry to prevent and control H5 and H7 avian influenza
(AI) in U.S. commercial broilers, layers and turkeys, their respective
breeders, and the live bird marketing system. Of the amount requested
in the low-pathogenicity avian influenza line item in the APHIS fiscal
year 2007 budget, approximately $8.1 million has been set aside for
cooperative agreements with the States to support H5 and H7 AI
surveillance activities. Of the amount requested in the high-
pathogenicity avian influenza line item in fiscal year 2007, APHIS has
set aside approximately $9.2 million for cooperative agreements with
the States to further enhance our AI surveillance activities.
Question. Will some of the funding for avian flu be available for
interstate coordination during an avian flu outbreak which would
include State officials and poultry producers?
Answer. The high-pathogenicity avian influenza (HPAI) line item
request does not include funding for an avian influenza outbreak. The
HPAI program is for avian influenza preparedness. In the event of an
outbreak, we would work closely with State officials.
FOOD SAFETY
Question. The Food Safety and Inspection Service (FSIS) recently
announced an initiative to reduce Salmonella levels in poultry.
However, USDA currently does not have the authority to enforce
Salmonella performance standards nor does it have authority to require
recalls of contaminated meat and poultry.
Will USDA implement deterrents or incentives for industry to make
lowering Salmonella levels in poultry a priority? If not, how will USDA
require industry to decrease Salmonella levels decrease?
Answer. USDA's Salmonella initiative does provide incentives to
industry to improve Salmonella controls.
Under the initiative, FSIS will provide the results of its
Salmonella performance standard testing to establishments on a sample-
by-sample basis as soon as they become available. The more rapid
disclosure of testing results under the initiative will allow
establishments to identify promptly any need for improved process
controls in slaughter or dressing operations and respond effectively.
In addition, FSIS will post quarterly nationwide data for
Salmonella on its Web site, as compared to the current practice of
posting annually; conduct follow-up sampling sets as needed; and
provide new compliance guidelines for the poultry industry. If a
facility does not meet the performance standards on two consecutive
sets, a food safety assessment will be conducted. Categorization of
establishments based on Salmonella positive samples will allow the
Agency to pursue a comprehensive strategy for combating the pathogen
and provide the industry incentives to control the prevalence of
Salmonella.
After that year of review, FSIS will reassess its policy. FSIS will
consider whether there are further actions that should be taken to
ensure that establishments improve their control of Salmonella and
further enhance public health protection. For example, FSIS would
consider actions that would provide an incentive to industry to improve
controls for Salmonella, such as posting on the Agency Web site the
completed Salmonella sample sets for each establishment. FSIS would
consider allowing establishments producing product classes with
superior performance to conduct pilot studies testing whether line
speeds could be increased above the current regulatory limits.
RESOURCE, CONSERVATION, AND DEVELOPMENT PROGRAM
Question. The President's budget would cut the Resource
Conservation and Development Program budget in half to $26 million.
This cut is done by eliminating over 225 coordinator positions and
requiring the remaining 150 coordinators to serve multiple RC&D areas.
In Iowa, this program has had widespread benefits in achieving such
important activities as reducing erosion in the Loess Hills, installing
dry hydrants for rural firefighters, and providing companies with seed
money to start up rural companies that create jobs for rural
communities.
Why did the President's budget target this program which involves
local leaders at the grassroots to solve critical needs for rural
communities and which has leveraged large additional investments beyond
the modest investment from the Federal Government?
Answer. The administration recognizes that the RC&D coordinators
and councils play an important role in protecting the environment in a
way that improves the local economy and living standards. However, the
Department of Agriculture, like every Federal agency, must share in the
government-wide effort to control Federal spending. The RC&D program
received a ``Results Not Demonstrated'' evaluation in the
Administration's Program Assessment Rating Tool results last year and
as a result, the administration is proposing program streamlining and
cost-cutting measures. The President's fiscal year 2007 budget proposal
will save $25 million by reducing the number of coordinator positions
while maintaining the current number of authorized RC&D Areas
nationwide.
______
Questions Submitted by Senator Byron L. Dorgan
RESEARCH BUDGET
Question. In your testimony this morning, you said ``reducing the
deficit is a critical part of the President's economic plan-Farmers,
ranchers, and rural citizens know the deficit and burden of debt have a
profound impact on the economy and the ability of future generations to
participate in agriculture.''
I agree with you. That's why I'm deeply disappointed that the
administration has chosen to support tax cuts for the wealthiest of
Americans over agricultural research and programs that benefit
America's family farmers. The administration proposes to cut USDA
discretionary spending by 6.5 percent over last year's funding levels.
And last year's funding levels were themselves $500 million lower than
the year before.
In the past few weeks, I have met with dozens of farmers, ranchers,
researchers, and community leaders who depend on USDA's research and
programs and who believe agricultural research is an investment in the
future of our farm economy. They ask me: ``How does the President
expect us to get by without this research?''
So I would ask you that same question: how does USDA expect
America's farm economy to remain competitive in the face of these deep
cuts in vitally important agricultural research?
Answer. Research is necessary for the farm economy to remain
competitive and a vital part of the American economy. The USDA
recognizes that a strong economy based on sound Federal investments and
reduced public debt is also vital to the American farm economy. In this
light, the USDA has presented budget requests that focus on the highest
priority issues and greatest opportunities. We are proposing new
research to protect crops and livestock so that the United States will
be a reliable trading partner and a competitive producer of food. We
have proposed new animal protection research on the vexing problem of
bovine spongiform encephalopathies and other transmissible spongiform
encephalopathies. We are supporting new research to greatly enhance the
production of bioenergy from cellulosic materials by modifying cell
walls of plants. We propose to address the national crisis of obesity
through new research. In these financially challenging times, we plan
to pay for these initiatives by having focused and efficient research
programs that address high priority needs.
DISASTER ASSISTANCE
Question. In your testimony today, you said that ``USDA has made
available $2.8 billion to assist those impacted by the hurricanes, of
which $1.2 billion will be made available to agricultural producers
through various programs . . . Total USDA aid to hurricane disaster
victims comes to more than $4.5 billion.''
I support emergency relief for those in the Gulf States who were
hit by Hurricanes Katrina and Rita. When people fall on tough times, we
have an obligation to help them. But what I do not support picking and
choosing which producers who suffered a weather-related disaster will
get help, and which will not.
North Dakota had over 1 million prevented plant acres last year,
due to excessive moisture. Parts of Bottineau County along the Canadian
border received one-third their annual rainfall in just 1 day. Every
county in North Dakota has been named a Primary or Contiguous Disaster
Area. But there has been no support from this administration for a
disaster assistance package that would help those producers.
USDA's own prediction is that net farm income will drop nearly 25
percent this year because of record high energy costs. I think that is
optimistic. North Dakota State University estimates that average farm
income in my State will fall 88 percent in 2006.
Outside North Dakota, farmers and ranchers in the Midwest
experienced one of their worst droughts in decades in 2005. Last year,
Illinois experienced its third-driest year since records first started
being kept in 1895. Parts of Missouri, Iowa, Wisconsin, Indiana, and
Arkansas were nearly as bad. USDA's own estimate last summer was that
agriculture losses from Hurricane Katrina would be $900 million, but
that losses from drought will be over $2 billion.
My office gets phone calls every day from producers who are barely
hanging on. They are meeting with their banker to see if they can
squeeze out another year on the farm, or if they will have to abandon
the farming lifestyle and the farm they grew up with. These farmers who
call me do not understand why Congress has not acted to help them. I
don't understand, either.
My question to you is, do you support an agricultural disaster
package for farmers and ranchers outside of the Gulf Coast? If not, why
not?
Answer. This administration has been, and continues to be, a strong
supporter of the Federal crop insurance program. Crop insurance should
be our first line of defense against the financial impact of natural
disasters. Farmers and rancher should be encouraged to protect
themselves through the purchase of crop insurance rather than expecting
ad hoc disaster assistance from the Federal Government.
Nation-wide, 2005 crop losses were not as severe as originally
expected. The loss ratio for crop insurance currently stands at about
0.54, meaning that producers have received 54 cents in indemnities for
each dollar of premium. This is a historically low level which reflects
stronger than expected yields and prices.
Furthermore, we would note that the hurricane damage in the Gulf
Coast differs markedly from the modest production losses sustained
nation-wide. Gulf Coast producers lost productive capacity through the
destruction of poultry houses, nurseries, and green houses and
environmental degradation of farm lands. The disaster assistance
provided to the Gulf States reflects this and is largely intended to
restore the productive capacity of this region.
VALUE-ADDED PRODUCER GRANTS
Question. The 2002 Farm Bill authorized the Value-Added Producer
Grant Program to receive $40 million in mandatory spending annually for
the life of the farm bill. In fiscal year 2004 and 2005, the program
request and the final appropriations was $15 million, a cut of roughly
60 percent each year. The USDA request for fiscal year 2006 was again
$15 million, but in the final appropriations bill we were able to
increase that amount to $20 million, still just half of the mandated
farm bill amount, but moving in the right direction.
What is USDA doing to ensure that this program is administered in
a manner consistent with Congressional intent expressed in the
manager's report language in the Farm Bill, which states that the
program should: fund a broad diversity of projects, projects likely to
increase the profitability and viability of small and medium-sized
farms and ranches, project's likely to create self-employment
opportunities in farming and ranching, and project likely to contribute
to conserving and enhancing the quality of land, water and other
natural resources?
Answer. USDA published regulations for the Value-Added Producer
Grant program in 2004 and publishes an annual notice soliciting
applications. These documents provide detailed information on how the
program is administered, including how applications are processed and
scored. Lists of grant recipients and brief descriptions of their
projects are available on-line at the USDA Rural Development website.
The descriptions demonstrate that the program has funded projects with
a wide variety of agricultural commodities combined with innovative
ways to add value. In 2004, USDA Rural Development put program
performance measures into place, and preliminary data on these measures
is now being reported and collected. This data indicates that many
grant recipients have experienced increased revenue and an expanded
customer base for their value-added products, which is consistent with
the Congressional intent that is expressed in the Conference Report on
the 2002 Farm Bill.
Question. Over the life of the existence of the VAPG program, how
many total project proposals has USDA received?
Answer. The Value-Added Producer Grant program was initially
authorized by the Agriculture Risk Protection Act of 2000. Since this
authorization, there have been 2,919 applications between 2001 and
2005.
Question. What was the total value of requested funds? Of these,
how many proposals were funded, and what were the actual funding
amounts?
Answer. The total value of funds requested in the 2,919
applications is $363,439,756. A total of 756 applications received
$116,272,496 in funding.
NATIONAL VETERINARY MEDICAL SERVICES ACT
Question. Many rural areas of this country face a severe shortage
of veterinarians. I understand that there are one-half as many
veterinarians available to respond in the event of an animal disease
outbreak as there were 20 years ago. The National Veterinary Medical
Service Act would help solve this shortage by providing loan repayments
to veterinarians who agree to practice in areas with a serious
veterinary shortage. Why is the National Veterinary Medical Services
Act not a functioning program within your department despite the
appropriation it received for fiscal year 2006?
What steps are necessary to begin this program?
Answer. USDA is exploring potential financial management strategies
both within the Department and in collaboration with other Federal
agencies in order to effectively run a loan repayment program. To
evaluate these and other programmatic issues presented by the National
Veterinary Medical Services Act, CSREES has constituted the National
Veterinary Medical Services Act working group to develop potential
program management strategies. The working group has met on four
occasions and is exploring alternative strategies for managing National
Veterinary Medical Services Act. We are working to ensure a well
thought out program plan which includes collaborations with veterinary
schools and other stakeholders to develop consensus regarding the
candidate eligibility requirements, and metrics to support prioritized
and weighted needs within the veterinary need areas identified within
the Act. A draft program management proposal is presently being
reviewed.
Question. How long do you anticipate it will take to begin this
program?
Answer. CSREES anticipates that the processes required to begin
this program will be completed in approximately 18 months.
APHIS BLACKBIRD CONTROL
Question. Various species of blackbirds cause an estimated $200
million in direct agricultural damage to a host of crops, including
sunflower in my State of ND. Many urban areas and airports have serious
problems as well.
Please describe efforts in the Department to deal with this
increasingly serious problem of what appears to be an accelerating
population.
Answer. We are undertaking a variety of actions to deal with
blackbird damages. Scientists at APHIS' National Wildlife Research
Center (NWRC) are studying ways to refine damage abatement methods and
develop new methods to reduce blackbird damage to sunflower crops in
the northern Great Plains. Of note, NWRC discovered two promising
chemical compounds that might discourage blackbirds from feeding on
sunflower. APHIS also conducts an annual cattail management program in
North Dakota and South Dakota to disperse large concentrations of
blackbirds from sunflower production areas. In addition, APHIS helps
farmers, homeowners, and municipalities nationwide with blackbird-
related problems. The agency develops site-specific management plans
for airports to address several wildlife hazard issues, including those
associated with blackbirds.
Question. Damage to ripening sunflower in the Dakotas and Minnesota
is as high as $20 million annually. Through this Subcommittee, I have
been successful in adding funding to enhance blackbird control efforts
in North Dakota. Yet APHIS has confirmed to my office that the agency
is spending less than 50 percent of what it did just 2 years ago on
this problem despite my efforts to provide direct funding for this
purpose.
What is the rationalization for diverting funds away from this
important purpose?
Answer. In 2003, Congress earmarked $368,000 for blackbird control
plus $240,000 to conduct an environmental impact study (EIS) and
$100,000 for cattail management activities. In 2005, Congress earmarked
$368,000 for blackbird control efforts. In addition, APHIS provided
$77,000 net in 2005 to ensure the highest level of service to sunflower
producers with blackbird problems. APHIS has not diverted earmarked
funds from this program and will continue to work with the National
Sunflower Association to address all concerns. Earmarked funding for
the continuation of these efforts in 2006 is $377,000.
2007 FARM BILL
Question. A number of farm and commodity organizations have
endorsed proposals to extend the 2002 Farm Bill until after the
completion of the latest round of WTO trade negotiations.
Do you support extending the 2002 Farm Bill? If not, why not?
Answer. I believe the appropriate approach under current
circumstances is to proceed to develop a new 2007 farm bill which
addresses the best interests of our producers and taxpayers. An
extension of the 2002 Farm Bill until after WTO negotiations are
complete would put us in a more reactionary rather than proactive
stance.
Question. I understand you have participated in a number of Farm
Bill listening sessions all over the United States. When will you issue
a final report on those listening sessions?
Answer. A series of issue papers that summarize information and
comments received in the Farm Bill forums around the country have been
completed and were made available on March 29, 2006. We did obtain a
great deal of input and a diverse range of ideas and comments which
will merit further study as we attempt to focus on what are the most
critical concerns to address in fashioning a new Farm Bill. As part of
that process, I have asked Dr. Keith Collins, our Chief Economist, to
develop a number of documents based on various themes that will provide
a straight forward, unbiased analysis. We will post these documents on
the USDA website and share them with all stakeholders.
STATE MEAT INSPECTION PROGRAM
Question. The 2002 Farm Bill directed USDA to conduct a
comprehensive review of State meat and poultry inspection programs and
to report to Congress on these activities by the Food Safety and
Inspection Service.
What is the status of this report?
Answer. USDA provided written interim updates on the Agency's
review of State meat and poultry inspection programs to the House and
Senate Agriculture Committees in September 2004, and again in July
2005.
On-site reviews of State Meat and Poultry Inspection programs have
been completed for 20 of the 28 States. Fourteen of those States have
been determined ``at least equal to'' the Federal inspection program,
with Wyoming and Utah currently on deferred status. On February 7,
2006, FSIS completed on-site reviews of New Mexico, North Carolina,
Oklahoma, and South Carolina, but final reports for these four States
have not yet been completed. The 8 remaining on-site reviews will take
place in 2006. In April, on-site reviews are scheduled for Indiana,
Louisiana, Maine, and West Virginia.
Question. I understand that all 28 State programs have had annual
record reviews and that the majority of them have had on-site reviews.
Is there a preliminary assessment on, and recommendations for, Congress
on State meat and poultry inspection programs?
Answer. At this time, we have not conducted on-site reviews in 8
States. USDA will not make recommendations to Congress on State meat
and poultry inspection programs until all on-site reviews have been
completed and evaluated.
BEEF IMPORTS AND BSE
Question. I have heard from cattle producers in North Dakota who
are concerned about USDA's approval of beef imports from Japan. As you
know, the prevalence of BSE in Japan is many times greater than that in
the United States.
Many U.S. consumers believe that, because Japan requires testing
for BSE of all meat intended for domestic consumption, meat exported
from Japan to the United States will be also tested for BSE. However,
the final rule adopted by USDA does not require such testing.
How much, if any, Japanese beef coming into the United States is
being tested for BSE, either by Japan or by the United States?
Answer. The final rule, published in the Federal Register on
December 14, 2005, established the conditions under which certain types
of beef may be imported from Japan. The regulations do not require that
the boneless beef be derived from animals that were tested for BSE. It
is important to note that the available tests for BSE are not
appropriate as food safety indicators.
Question. Based on USDA's actions relative to importing beef from
Canada, there is a presumption by the American public that meat coming
from a country with a BSE-infected herd will be from younger cattle.
However, USDA's final rule governing the importation of Japanese beef
appears to put no such age limits on the beef imported from Japan,
despite the fact that Japan restricted U.S. beef imports to cattle 20
months of age and younger. This suggests that we should have more
stringent rules regarding Japanese beef coming into the United States
than we currently have.
Does USDA consider it necessary to impose an age restriction on
imports of Japanese beef similar to the restrictions previously placed
on American beef exports to Japan?
Answer. USDA did not include an age restriction in the import
requirements for whole cuts of boneless beef from Japan. APHIS
established the requirements for allowing the import of whole cuts of
boneless beef from Japan based on a thorough risk analysis. BSE studies
in cattle have not detected infectivity in boneless beef, which is what
is eligible for import, regardless of the age of the animal. For these
reasons, we consider whole cuts of boneless beef to be inherently low-
risk for BSE and determined that they can be safely traded provided
that measures are taken to prevent cross-contamination during
processing.
Question. What is USDA's position on allowing private testing of
beef for BSE by U.S. producers and processors?
Answer. Given the consequences and governmental actions that can
result from BSE testing of animals, USDA believes that such testing is
an inherently governmental function that must be conducted by Federal
and State laboratories. We would also like to clarify that BSE tests
are not conducted on cuts of beef. Rather, the tests are performed on
brain tissue taken from dead or slaughtered cattle to diagnose the
presence of BSE in that animal.
Question. Why are the BSE importation rules not being changed to
better reflect the current status of nations the U.S. imports beef
from?
Answer. The APHIS regulations concerning BSE-related restrictions
have been changed over the past year to reflect both the status of
certain countries regarding BSE and the currently accepted scientific
guidelines for appropriate risk mitigations on various products.
Further, APHIS regulations are consistent with international guidelines
on BSE.
GIPSA
Question. There have been very disturbing reports about the failure
of USDA's Grain Inspection, Packers, and Stockyards Administration to
properly investigate claims of wrongdoing.
Please tell me the steps you are taking to restore rural America's
confidence in GIPSA and how you intend to make sure this agency
fulfills its proper oversight role.
Answer. GIPSA intends to implement all recommendations in the OIG
report. GIPSA has already issued policy directives in response to
several of the recommendations and is initiating a review process to
ensure that the directives are being followed and implemented properly.
However, GIPSA has gone further than just the OIG recommendations.
For example, the agency has requested a full scale organizational
review to provide recommendations on how to improve the agency's
operational effectiveness. Also, the new GIPSA Administrator recently
ordered an Office of Personnel Management-administered Organizational
Assessment Survey. The survey gives employees an anonymous opportunity
to let the Administrator know what they think about the organization on
a range of topics. Results will be used to make decisions about work
environment improvements in the program and enhance its organizational
effectiveness. The Administrator is also working to develop an
organizational culture to ensure at all levels a recommitment to OIG
and GAO recommendations and to redirect resources to achieve mission-
critical activities.
______
Questions Submitted by Senator Richard J. Durbin
DISASTER ASSISTANCE
Question. My first question pertains to the budget's assumption
that there will be no ad hoc disaster relief spending for farmers this
year. On January 26, 2006, your office announced that it would
distribute $1.2 billion to producers that sustained losses due to
Hurricane Katrina. This spending will go to producers in Mississippi,
Florida, Louisiana, and other Gulf Coast States. However, as you know,
there were natural disasters in many parts of the country that hurt
producers significantly. In my home State of Illinois and many other
parts of the Corn Belt, producers experienced one of the worst droughts
since modern records have been kept. Almost every county in Illinois
was declared a primary disaster area. According to crop indemnity
statistics, Illinois yields were down significantly and indemnities
rose.
I would like an answer as to why emergency funds have not been
directed to producers in my State, and I would like the relevant branch
of the USDA to provide an estimate of the amount of losses sustained
State-by-State due to natural disasters this past year.
Answer. Yields in Illinois were down in 2005 when compared to the
record production of 2004. However, when compared to historical
averages, crop losses in Illinois were not as severe as expected.
Current crop insurance data indicates that the loss ratio for Illinois
is about 0.50. By contrast, the loss ratio in Florida stands at nearly
3.0, the highest in the Nation. The difference in losses becomes even
more apparent when you consider that nearly 85 percent of Illinois
crops are insured at a 70 percent or higher coverage level meaning that
the majority of producers needed a loss of just 10 to 30 percent to
qualify for an indemnity. By contrast, less than 18 percent of Florida
crops are insured at such high coverage levels. In fact, over 63
percent of Florida crops are insured at the catastrophic level meaning
they needed to sustain losses in excess of 50 percent to qualify for an
indemnity.
At the present time we do not have a break-down of losses sustained
State-by-State due to natural disasters. However, the Risk Management
Agency does have a break-down of losses sustained State-by-State due to
all causes of loss; which may include losses stemming from price
declines.
[The information follows:]
FEDERAL CROP INSURANCE CORPORATION CROP YEAR STATISTICS FOR 2005 AS OF 3/20/2006
[Nationwide Summary--By State]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Policies
State Policies Sold Earning Policies Net Acres Liabilities Total Premium Premium Indemnity Loss
Premium Indemnified Insured Subsidy Ratio
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
ALABAMA........................................... 13,358 6,175 1,275 1,037,905 266,638,428 30,294,966 18,286,761 14,719,917 .49
ALASKA............................................ 37 22 .............. 5,864 419,584 53,432 45,525 .............. .........
ARIZONA........................................... 2,109 973 72 381,969 150,917,945 8,497,319 5,256,239 1,877,860 .22
ARKANSAS.......................................... 33,456 17,706 3,730 4,564,203 489,344,042 45,621,410 33,525,853 27,975,089 .61
CALIFORNIA........................................ 32,945 24,939 3,140 3,817,389 3,322,510,070 169,072,162 120,901,931 79,763,804 .47
COLORADO.......................................... 36,022 17,140 10,117 3,928,423 579,414,985 84,784,549 48,770,711 96,305,825 1.14
CONNECTICUT....................................... 411 296 40 22,152 70,382,422 3,517,559 2,376,180 622,699 .18
DELAWARE.......................................... 1,629 1,170 426 263,145 45,150,127 4,576,175 2,967,234 2,695,938 .59
FLORIDA........................................... 17,886 14,491 3,612 1,373,469 2,978,645,459 106,546,097 77,499,714 310,683,797 2.92
GEORGIA........................................... 34,796 14,321 3,467 2,449,745 727,871,287 78,312,292 48,135,009 56,789,355 .73
HAWAII............................................ 140 138 5 26,506 77,903,217 913,243 625,013 387,341 .42
IDAHO............................................. 11,150 6,321 1,426 1,849,657 536,046,499 42,134,361 24,522,855 23,595,390 .56
ILLINOIS.......................................... 135,200 110,759 23,902 15,916,643 3,939,276,514 277,222,446 149,641,601 137,614,012 .50
INDIANA........................................... 51,866 41,996 6,900 7,703,368 2,002,619,812 163,300,587 87,078,250 25,001,170 .15
IOWA.............................................. 151,329 127,408 12,734 19,909,552 4,513,906,738 310,561,169 166,880,925 67,947,493 .22
KANSAS............................................ 237,020 123,906 33,215 16,403,797 1,894,187,392 261,253,464 150,721,768 117,836,089 .45
KENTUCKY.......................................... 21,908 12,410 2,242 1,848,103 399,460,535 34,702,791 20,523,436 16,478,773 .47
LOUISIANA......................................... 24,268 9,471 1,739 2,645,190 386,339,172 33,641,733 23,162,354 16,250,621 .48
MAINE............................................. 670 518 160 100,357 60,150,179 5,087,398 3,530,434 5,573,387 1.10
MARYLAND.......................................... 5,563 4,179 804 750,124 175,680,023 15,024,802 9,883,561 4,266,926 .28
MASSACHUSETTS..................................... 800 604 104 26,829 47,248,511 2,454,178 1,715,709 2,239,041 .91
MICHIGAN.......................................... 28,560 20,759 2,815 3,571,061 923,476,088 74,022,000 44,997,976 15,860,243 .21
MINNESOTA......................................... 123,856 82,367 14,838 16,248,086 3,137,522,415 284,883,602 159,009,913 131,820,332 .46
MISSISSIPPI....................................... 16,405 7,265 1,194 3,200,937 423,650,399 37,416,582 24,606,293 16,611,379 .44
MISSOURI.......................................... 76,164 46,459 13,414 7,039,822 970,677,140 111,472,976 69,187,614 74,237,351 .67
MONTANA........................................... 39,785 22,567 3,326 33,915,723 672,585,090 96,239,181 56,274,382 24,573,063 .26
NEBRASKA.......................................... 159,011 95,153 21,766 14,121,474 2,726,193,994 253,899,361 141,880,921 79,564,839 .31
NEVADA............................................ 152 115 32 38,102 13,967,262 1,023,211 595,975 763,228 .75
NEW HAMPSHIRE..................................... 118 98 17 8,121 9,515,182 381,105 275,311 490,792 1.29
NEW JERSEY........................................ 1,521 1,067 129 156,939 87,457,732 3,486,846 2,854,527 1,413,404 .41
NEW MEXICO........................................ 3,615 1,763 229 551,108 80,983,767 10,635,155 6,990,003 2,430,038 .23
NEW YORK.......................................... 6,329 4,340 658 714,682 233,205,271 17,854,230 12,421,731 12,031,267 .67
NORTH CAROLINA.................................... 35,045 19,037 4,783 3,101,172 906,615,258 77,458,243 46,861,372 63,726,912 .82
NORTH DAKOTA...................................... 170,987 74,758 26,596 20,393,248 2,032,938,321 308,384,516 178,545,676 222,427,856 .72
OHIO.............................................. 51,177 40,288 11,083 5,742,109 1,336,152,625 109,260,601 59,310,152 44,364,624 .41
OKLAHOMA.......................................... 36,002 19,698 6,453 4,668,500 408,355,429 60,183,880 36,530,873 26,770,647 .44
OREGON............................................ 6,082 3,506 1,080 878,217 544,055,132 18,199,764 11,366,471 25,330,774 1.39
PENNSYLVANIA...................................... 15,281 11,410 2,383 1,117,322 249,867,340 29,841,007 19,260,202 14,811,482 .50
RHODE ISLAND...................................... 57 36 6 1,529 840,333 60,232 45,452 55,859 .93
SOUTH CAROLINA.................................... 10,142 5,404 1,312 1,057,078 273,512,449 28,391,120 17,924,781 18,181,566 .64
SOUTH DAKOTA...................................... 112,973 62,641 19,023 13,583,329 1,618,226,090 230,818,186 134,592,001 116,288,325 .50
TENNESSEE......................................... 16,646 9,217 1,179 1,865,720 651,254,289 32,535,870 22,291,662 12,693,138 .39
TEXAS............................................. 172,730 74,337 16,955 13,604,810 1,988,774,231 315,743,910 198,748,630 146,587,572 .46
UTAH.............................................. 1,172 847 173 173,209 21,421,230 2,625,837 1,650,607 2,846,260 1.08
VERMONT........................................... 596 509 43 72,085 16,753,118 1,201,826 837,124 329,444 .27
VIRGINIA.......................................... 12,238 6,745 2,008 970,105 271,737,055 23,357,692 14,259,115 14,251,573 .61
WASHINGTON........................................ 16,260 11,823 2,072 2,403,707 1,050,845,453 48,835,523 31,421,700 21,611,628 .44
WEST VIRGINIA..................................... 942 494 84 45,381 11,247,813 1,285,520 870,190 641,063 .50
WISCONSIN......................................... 37,485 28,708 5,471 4,053,136 857,353,335 80,504,835 47,060,824 35,885,299 .45
WYOMING........................................... 6,371 3,968 869 7,490,239 93,006,210 10,534,970 6,466,884 6,034,049 .57
---------------------------------------------------------------------------------------------------------------------------------------------
Grand Total................................. 1,970,265 1,190,322 269,101 245,811,341 44,276,302,992 3,948,109,914 2,343,189,425 2,141,258,534 .54
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
The issue of rural development is of serious concern to me. I just
don't see how this budget demonstrates a commitment to the needs of
rural America. Here's one item that jumps out at me: consolidation of
Farm Service Agency (FSA) offices. I continue to be concerned that
there are signals going out to State FSA directors that they will be
able to shutter FSA offices.
Consolidating these offices would mean that farmers have to spend
more time driving around to access the essential services provided by
FSA offices, and would result in a direct decrease in these services.
FSA OFFICE CLOSURES
Question. The issue of rural development is of serious concern to
me. I just don't see how this budget demonstrates a commitment to the
needs of rural America. Here's one item that jumps out at me:
consolidation of Farm Service Agency (FSA) offices. I continue to be
concerned that there are signals going out to State FSA directors that
they will be able to shutter FSA offices.
Consolidating these offices would mean that farmers have to spend
more time driving around to access the essential services provided by
FSA offices, and would result in a direct decrease in these services.
First, I would like to know what mechanism the Secretary proposes
for State authorities to be given discretion to close FSA offices.
Also, I would like the Secretary to respond in unequivocal terms that
should State or Federal authorities choose to consolidate FSA offices,
that Members of Congress be consulted. I would like to know what plans
the Secretary has for keeping Members in the loop fully through the
process.
Answer. The Department and the Farm Service Agency (FSA) is
committed to meeting the needs of farmers and ranchers in the 21st
Century, and wisely investing in our employees, technology and
equipment will only improve customer service delivery. We are also
committed to coordinating with Congress, stakeholders, local groups and
customers to ensure the Agency offers the best service possible.
FSA is working with the State Executive Directors (SEDS) for each
State. FSA is asking each SED to conduct an independent local-level
review of the efficiency and effectiveness of FSA offices in their
State. SEDs and State Committees will form a review committee to
identify what the optimum network of FSA facilities, staffing, training
and technology should be for your State within existing budgetary and
staffing resources. Further, SEDs will explore potential joint-effort
opportunities with the Natural Resources Conservation Service and other
USDA agencies.
There is no comprehensive national plan or formula for identifying
the optimum network of FSA offices. Each State will review its own
county office system before submitting recommendations for technology
upgrades, staffing, training and facilities.
As recommendations are received from each State, FSA will hold
public hearings and coordinate communications efforts with area
farmers, ranchers, and stakeholders. If the office closure or
consolidation moves forward, FSA will notify the appropriate members of
Congress, including those on the Appropriations Subcommittees.
The Department is committed to a continued dialogue with State and
congressional leaders to discuss how best to modernize the FSA county
office system and the necessary steps required to improve its
information technology (IT) infrastructure. The ultimate goal of this
process is to increase the effectiveness of FSA's local offices by
upgrading equipment, investing in technology and providing personnel
with critical training. Optimizing the county office structure
consistent with IT modernization is absolutely essential if the
Agency's tradition of excellent customer service is to be maintained.
______
Questions Submitted by Senator Tim Johnson
IMPORTS OF JAPANESE BEEF
Question. When Japan opened its market to U.S. exports of beef from
animals under 20 months of age, the U.S. simultaneously opened up its
market to a broad range of beef from Japan, including beef from animals
over 30 months of age. Japan implemented its ruminant-to-ruminant feed
ban in 2001, and has had more than 20 cases of Bovine Spongiform
Encephalopathy (BSE).
Can you explain how the U.S. import standard for beef from Japan
meets the standards of the World Organization for Animal Health (OIE)
for mitigating the risk of spread of BSE?
Answer. The OIE guidelines provide for three possible BSE
classifications for an exporting country: negligible risk, controlled
risk, and undetermined risk, with export conditions increasingly
stringent as the status of a region moves from negligible risk through
controlled risk to undetermined risk. The import conditions for whole
cuts of boneless beef from Japan, including the requirements for
specified risk material removal and restrictions on stunning and
pithing, are consistent with OIE's criteria for meat exported from
controlled-risk regions.
Question. How does this import standard take into account the fact
that science is still evolving regarding the question of whether or not
the prions responsible for BSE infection may be found in sciatic nerve
tissue and muscle cuts of meat?
Answer. APHIS recognizes that ongoing research with increasingly
sensitive detection measures may find the presence of abnormal prions
in different tissues. This does not negate the previous research
studies nor the years of epidemiological evidence that demonstrate the
lack of infectivity in muscle meat. The incidence of BSE worldwide
continues to decrease, providing evidence that the established control
measures are working. These control measures are based on previous
research and epidemiological evidence, and demonstrate that this
research has identified those tissues that contain essentially all of
the relevant infectivity in cattle tissues.
Question. Does this opening to beef from a country with a feed ban
since 2001 comply with USDA's earlier position that risk mitigation
required the existence of a feed ban for a minimum of 7 years?
Answer. A feed ban in relation to the definition of a BSE-minimal
risk region--which is not relevant to the import of boneless beef from
Japan--requires that a minimal-risk region should maintain risk
mitigation measures adequate to prevent widespread exposure and/or
establishment of disease, including the fact that a ruminant-to-
ruminant feed ban is in place and is effectively enforced. There is no
time frame specified.
Question. Why did the United States agree to impose less stringent
import standards for meat from a country with BSE problems than that
country agreed to impose on our exports?
Answer. Japan requested that the USDA consider allowing the
resumption of beef imports from Japan based on the safeguards they had
implemented to prevent and control BSE. APHIS conducted a thorough risk
analysis to evaluate this request, and determined that the importation
of whole cuts of boneless beef could be allowed while continuing to
protect the United States against the introduction of BSE.
IMPORTS FROM CANADA
Question. In January of this year, Canada confirmed the detection
of another animal infected with BSE in Alberta. The animal in question
was born 3 years after Canada imposed its ruminant-to-ruminant feed
ban. In addition, in December of last year, USDA's Inspector General
confirmed that Canadian beef inspection officials were still not
enforcing certain measures required of them in order to qualify for
equivalence to the U.S. inspection system, despite the fact that USDA
originally identified these problems in the Canadian system as early as
2003. Yet FSIS is only now developing and implementing protocols to
evaluate deficiencies in the Canadian system.
In light of these developments, is USDA considering re-evaluating
its Canadian import policy?
Answer. USDA remains confident in the animal and public health
measures that Canada has in place to prevent BSE, combined with
existing U.S. domestic safeguards and additional safeguards outlined in
the final rule recognizing Canada as a minimal-risk region for BSE.
Question. Do you feel there are any additional safeguards that may
be needed in our import regulations to account for the discovery of an
infected animal Canadian born after the feed ban, and the continued
deficiencies in Canada's meat inspection system?
Answer. USDA feels that the safeguards currently in place are
sufficient to protect public health against BSE. USDA requires that all
foreign countries that export meat and poultry to the United States
must have an inspection system equivalent to the one in this country.
This means that all of our trading partners must meet our domestic
regulatory standards, including the ban on specified risk materials
(SRMs) and the prohibition of non-ambulatory disabled cattle from the
human food supply.
Canada has SRM removal requirements that are virtually identical to
the current U.S. regulations. The only difference is that Canada does
not consider tonsils to be SRMs in cattle less than 30 months of age.
However, all meat exported from Canada to the United States must have
the tonsils removed, pursuant to U.S. regulations.
Question. If you don't believe any modifications in our import
regulations are needed, why not?
Answer. USDA remains confident in the animal and public health
measures in place in both Canada and the United States. With respect to
BSE, risk mitigation is not tied to the success or failure of one
individual measure. It relies on an interlocking sequence of risk
mitigation measures that provide an overall measure of risk protection.
The Canadian BSE risk assessment evaluated the total effect of all of
these measures, and was not based on one individual measure.
COUNTRY OF ORIGIN LABELING
Question. American cattle producers often argue that one of the
most important steps that could boost their competitiveness at home and
abroad would be to differentiate their product to consumers as meat
exclusively from animals born and raised in the United States. In fact,
customers in some of our most important export markets are also
demanding source verification of U.S. meat exports. Yet country of
origin labeling is still not mandatory for U.S. meat products, and
there is no way for consumers to distinguish whether meat packed in the
United States is from U.S. animals or foreign animals.
Does USDA see mandatory country of origin labeling for meat,
including information on animal origin, as a competitive advantage for
U.S. producers?
Answer. Evidence from the marketplace suggests that the willingness
of consumers to pay for information about the origin of their food is
not high. If market premiums for country of origin information were
available, there would be strong incentives for the industry supply
chain to provide that information voluntarily to consumers. Since the
level of voluntary labeling for country of origin of U.S. foods is
minimal, the willingness of consumers to pay for the information
appears to be small. That being the case, there most likely would be
minimal competitive advantage for U.S. producers under a mandatory
program.
Question. If export customers are demanding such information,
shouldn't U.S. consumers have access to the same information about the
food they eat?
Answer. Many groups, including consumers and industry associations,
have expressed an interest in country of origin labeling. In general,
providing more information to consumers to make informed purchase
decisions is better than less or no information. If the costs of
providing the additional information exceed the benefits, however, then
there is no economic rationale for providing it.
Question. What can USDA do to help ensure that U.S. producers can
differentiate their product in the market?
Answer. There are existing user-fee programs administered by USDA
that address this issue, such as the Process Verified Program. Under
this program, individuals can request that USDA verify live animal or
product attributes, including the source of their animals. USDA's
voluntary marketing programs are currently assisting U.S. producers in
differentiating their products in domestic and international
marketplaces.
RESOURCE, CONSERVATION, AND DEVELOPMENT PROGRAM
Question. I am concerned for the President's budget request for the
Resource, Conservation, & Development program. RC&D leverages $8 in my
community for every $1 the Federal Government invests. What other
programs in your agency budget bring this type of return on investment
to rural areas?
Answer. USDA delivers a variety of rural economic development, farm
support, research, conservation, and forestry programs that collaborate
closely with local communities and landowners to address their locally
identified priorities. Many of these programs cost share the financial
and technical assistance costs with State and local governments, and
the private sector, to more cost effectively deliver benefits for local
communities.
Question. It is my understanding that while we level funded RC&D
that the following States lost funds in your new resource based
allocations. Can you tell us what factors you used to determine the
resource allocations? I note that States served by Members of this
Subcommittee like Missouri, Kentucky, Kansas, California, Iowa,
Illinois, and North Dakota lost funding under this process.
Answer. State RC&D allocations are now based on 19 resource concern
factors which reflect the four program statute purposes of Land
Conservation, Land Management, Water Management, and Community
Development; and State specific factors which reflect the cost of doing
business within the State. In fiscal year 2006 the resource concern
factors reflected 90 percent of the allocation and State specific
factors reflected 10 percent. The new approach was designed so that no
State received a reduction in allocation greater than 5 percent.
Additional information, including a list of fiscal year 2006 allocation
factors and weights used is provided for the record.
[The information follows:]
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
This new targeted allocation approach addresses Program Assessment
Rating Tool (PART) concerns about the need for targeting resources to
address the highest priority needs. It uses weighted state and local-
level data elements collected through the Natural Resources Inventory
(NRI), National Agricultural Statistics Service (NASS), U.S. Census
Bureau, Economic Research Service and other reliable and statistically
sound sources to highlight the resource needs in the States. The
targeted allocations reflect national NRCS priorities and tie to long-
term program goals.
Question. Can you give us an update on management issues within the
RC&D program including long term program goals and the status of the
new POINTS database?
Answer. There are a number of improvements underway for the program
that address operating deficiencies highlighted through the PART
results and through the national evaluation conducted in conjunction
with RC&D councils in fiscal year 2004-2005.
By the end of April, NRCS will have a new RC&D program performance
reporting system, POINTS, in place that will enable more effective
management of program performance and more closely link performance
with budget requests. In addition, NRCS has recently developed new
national long-term, outcome-oriented program performance measures and
goals that meaningfully reflect the program's purpose. The new long-
term performance measures, reflecting the core of activities undertaken
by RC&D Councils, were developed using information provided by the
National Association of RC&D Councils (NARC&DC).
NRCS is working with RC&D Councils to develop Area Plans and annual
plans of work that tie more closely to the new targeted approach to
addressing the highest priority needs and be more accountable for
showing program performance.
NRCS is also taking steps with the National Association of RC&D
Councils (NARC&DC) to increase program participation with Indian
Tribes, an item of concern reported in the national program evaluation.
Hands-on training is being provided to RC&D councils and coordinators
on working more effectively with Tribes. In addition, a useful handbook
has been developed to aid local councils in their daily interaction and
outreach activities with Tribes.
Question. RC&D was originally intended to be administered by NRCS
yet bring to bear the resources of all USDA programs in a community. We
hear from constituents that conservation and implementation of Farm
Bill programs are the priority for NRCS employees associated with the
program.
What are you doing to maintain the integrity of the RC&D area
planning process and ensure that in areas where rural development is a
priority that council can still receive assistance from the Federal
coordinator?
Answer. All program improvements being implemented for the RC&D
program are designed to maintain the integrity and authorities of the
program. Under long-standing NRCS policy, the RC&D Area Plan developed
by each council must address all four statutory components of the
program: land conservation, water management, community development and
land management. Rural development activities fall within these
components. The technical assistance provided through RC&D coordinators
and other NRCS employees address the high priority concerns outlined in
the RC&D area plans to the extent that RC&D appropriations are
available.
Question. We hear that States no longer have full time coordinators
and that part time program assistant positions have been eliminated in
most States.
The program was level funded. How has this happened?
Answer. Despite continued increased costs relating to salaries,
rent, equipment, supplies, fuel, etc., program efficiencies and more
effective leveraging of Federal funds allow the program to deliver the
high level of service in 2006 as in prior years.
Question. Can you detail the level of support provided to each
State?
Answer. In fiscal year 2006 the following funds were provided to
each State:
------------------------------------------------------------------------
Total fiscal
State year 2006
allocation
------------------------------------------------------------------------
Alabama................................................. $1,095,450
Alaska.................................................. 984,616
Arizona................................................. 801,550
Arkansas................................................ 856,767
California.............................................. 1,465,350
Colorado................................................ 973,733
Connecticut............................................. 274,083
Delaware................................................ 134,417
Florida................................................. 940,917
Georgia................................................. 1,343,633
Hawaii.................................................. 549,694
Idaho................................................... 1,075,333
Illinois................................................ 1,221,917
Indiana................................................. 1,095,450
Iowa.................................................... 1,947,467
Kansas.................................................. 1,096,716
Kentucky................................................ 1,704,033
Louisiana............................................... 940,917
Maine................................................... 672,083
Maryland................................................ 403,250
Massachusetts........................................... 403,250
Michigan................................................ 940,917
Minnesota............................................... 1,075,333
Mississippi............................................. 940,917
Missouri................................................ 1,009,897
Montana................................................. 1,075,333
Nebraska................................................ 1,460,600
Nevada.................................................. 403,250
New Hampshire........................................... 268,833
New Jersey.............................................. 268,833
New Mexico.............................................. 979,469
New York................................................ 1,023,728
North Carolina.......................................... 1,217,167
North Dakota............................................ 998,832
Ohio.................................................... 1,095,450
Oklahoma................................................ 1,095,450
Oregon.................................................. 672,083
Pennsylvania............................................ 1,095,450
Rhode Island............................................ 134,417
South Carolina.......................................... 940,917
South Dakota............................................ 940,917
Tennessee............................................... 1,217,167
Texas................................................... 2,677,767
Utah.................................................... 940,917
Vermont................................................. 268,833
Virginia................................................ 940,917
Washington.............................................. 940,917
West Virginia........................................... 735,050
Wisconsin............................................... 940,917
Wyoming................................................. 672,083
Pacific Basin........................................... 280,863
Puerto Rico............................................. 403,250
---------------
Total Allocated to States......................... 47,637,100
------------------------------------------------------------------------
Question. RC&D coordinators are being pulled from their program
responsibilities to implement Farm bill programs. What is the average
amount of time a coordinator spends on RC&D program activities
nationally?
Answer. RC&D coordinators are spending at least 75 percent of their
time on RC&D program activities.
Question. Is this time charged to the TA portion of Farm bill
programs?
Answer. NRCS time charges are directly connected to the benefiting
program. If an RC&D Coordinator works on a Farm Bill related program
their time is charged directly to those programs on a case-by-case
basis. Only RC&D work is charged to the RC&D program.
Question. Anecdotal evidence indicates that RC&D councils are
taking on more and more of NRCS overhead and administrative costs.
Can you provide a comparison by State of the administrative costs
assessed to RC&D in proportion to other Federal programs in your
agencies jurisdiction?
Answer. The comparison by State for fiscal year 2006 is provided
for the record.
[The information follows:]
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
Question. The House bill included report language that the
Committee expects the NRCS to promptly fill RC&D coordinator vacancies.
The Committee expects support provided under this act to be allocated
equitably among the 375 existing councils and that priority be given to
providing every council a full-time coordinator.
What States returned funds to headquarters at the end of the fiscal
year?
Answer. Eight States, Alaska, Arizona, Florida, Illinois, Nevada,
North Carolina, Utah, and Washington had unused funds at the end of
fiscal year 2005 in amounts ranging from $10,000 to $101,000. There
were 20 other States that had unused funds of less than $10,000; they
were Alabama, Arkansas, Georgia, Hawaii, Indiana, Maine, Massachusetts,
Michigan, Mississippi, Montana, New Jersey, New York, North Dakota,
Oregon, Rhode Island, Tennessee, Texas, Virginia, Wisconsin, and
Wyoming. The Funds were then redistributed using the allocation
formula.
Question. Please provide a chart of coordinator vacancies that took
place in fiscal year 2006 and the length of time it took to fill the
position with a permanent employee?
Answer. Since the beginning of fiscal year 2006 there are 10
vacancies.
----------------------------------------------------------------------------------------------------------------
Number of Vacant since
State vancancies est. Length vacant
----------------------------------------------------------------------------------------------------------------
Florida......................................................... 1 10/05 6 months
Georgia......................................................... 1 2/06 2 months
Kentucky........................................................ 1 1/06 3 months
Louisiana....................................................... 1 2/06 2 months
Massachusetts................................................... 1 1/06 3 months
Michigan........................................................ 1 1/06 3 months
North Carolina.................................................. 1 1/06 3 months
Ohio............................................................ 1 1/06 3 months
Oklahoma........................................................ 1 1/06 3 months
South Dakota.................................................... 1 3/06 1 month
----------------------------------------------------------------------------------------------------------------
Question. Include an explanation of how appropriated funds were
used while there were extended vacancies. Will vacancies that occur in
fiscal year 2006 be promptly filled?
Answer. Funds are allocated to the States to support RC&D
activities within the State. In most cases when there is a vacancy,
appropriated funds are used for another NRCS employee to serve in an
acting capacity for the Coordinator. If that is not possible, the funds
are not used until the position is filled. When the positions are
filled, the funds are used to cover salary and relocation costs
incurred in filling the position. In some cases relocation costs can
exceed $100,000. In situations where funds are limited, filling
vacancies is deferred until the employee relocation costs and salary
can be absorbed. Vacancies that occur in fiscal year 2006 are being
filled as funding permits.
Question. Why has no input been asked for or taken from local RC&D
councils in regard to the fiscal year 2006 Goaled Performance Measures
in accordance with Public Law 107-171 and NRCS's own Programs Manual
part 513 on RC&D program (May, 2002) section a, b, and c?
Answer. In fiscal year 2005, NRCS established goaled performance
measures for all programs covering a two-year period, fiscal year 2005
and fiscal year 2006. However, information provided by the NARC&DC,
representing the 375 councils nationwide, was used in the development
of the new annual, long-term and efficiency measures for the program
being implemented for fiscal year 2006 and 2007. The NARC&DC, through a
cooperative agreement with NRCS, provided eight long term program
performance measures, and four program priorities based on their
research of local RC&D council area plans.
Question. Why should local RC&D Council Members who are volunteers
continue to spend their time on RC&D goals which are decided at the
Washington DC level, rather than at the local, grassroots community
level which was the intent of the RC&D legislation?
Answer. Performance goals established for the RC&D program are
required by the Government Performance and Results Act of 1993. The
goaled performance measures established for the RC&D program relate to
the statutory elements outlined in the authorizing legislation and
reflect program benefits that RC&D councils have been reporting for
many years. Participation in the RC&D program is voluntary and not
limited to goaled performance measures. However, the goaled performance
measures are tied to program budget requests and the types of
activities for the Federal coordinator.
Question. How can the Office of Management and Budget ignore the
statutory mission established for the RC&D program?
Answer. The Office of Management and Budget does not ignore the
statutory mission established for the RC&D program. Performance goals
relate to the four statutory elements in the authorizing legislation of
the program.
Question. Are there any other programs that have the ability to
bring together grassroots community vision and mission based on local
needs and leverage the dollars to local communities at 6:1-10:1?
Answer. USDA delivers a variety of rural economic development, farm
support, research, conservation, and forestry programs that provide
technical and financial assistance to address local needs.
Question. Why has the NRCS abandoned grassroots priority-setting
for the RC&D program in response to the PART review conducted by OMB?
Answer. NRCS has not abandoned grassroots priority setting for the
RC&D program. RC&D Councils can set their priorities as they relate to
the four statutory elements in the authorizing legislation.
COMMODITY SUPPLEMENTAL FOOD PROGRAM
Question. In relation to the Commodity Supplemental Food Program,
why would you eliminate a Federal program that provides a $50 retail
value of food each month, at a cost of just $16 a month to the tax
payers, with $20 worth of food stamps? This would equate to a loss of
$30 in benefits to our Nation's elderly at a time of rising medical and
utility costs. Isn't this an example of a judicious use of the tax
payer's dollars being discarded?
Answer. The CSFP is a relatively small program that operates in
limited areas of 32 States, two Indian reservations, and the District
of Columbia. Its benefits are to a great extent redundant of those
available through other nutrition assistance programs. In an era of
fiscal constraint, we must ensure that limited resources are targeted
to those programs that are available to needy individuals and families,
regardless of the communities in which they reside. The populations
served by CSFP are eligible to receive similar benefits through other
Federal nutrition assistance programs that offer them flexibility to
meet their individual nutritional needs and preferences. The
administration has proposed this change to better target limited
resources to those major programs that are available nationwide,
promoting equity and effectiveness. If Congress adopts the budget
request, we will work closely with CSFP State agencies to ensure that
any negative effects on program participants are minimized and that
they are transitioned as rapidly as possible to other nutrition
assistance programs for which they are eligible.
Elderly participants who are leaving the CSFP upon the termination
of its funding and who are not already receiving FSP benefits will be
eligible to receive a transitional benefit worth $20 per month ending
in the first month following enrollment in the FSP under normal program
rules, or 6 months, whichever occurs first. The average food stamp
benefit for an elderly person living alone was $65 per month in 2004.
The percentage of food stamp households with elderly that received the
maximum benefit (14 percent) was nearly as large as the percentage that
received the minimum benefit of $10 (17 percent). Thus, most elderly
food stamp participants receive more than $10 per month, and we expect
that this pattern would extend to new FSP participants leaving CSFP as
well.
Question. Why would you consider eliminating the CSFP, unlike any
other, that receives donations of goods, services and volunteer hours
with a value nearly equal to the administrative reimbursement by USDA?
Besides providing a critical food supplement to our low income seniors,
CSFP also provides a $1 donation for every $1 of administrative costs.
Answer. We greatly appreciate our CSFP partners at the State and
local level who have worked on behalf of this program and hope that
their efforts can be directed toward volunteer opportunities in other
USDA commodity programs, including the Emergency Food Assistance
Program (TEFAP). Under TEFAP, local nonprofit organizations that are
staffed mainly by volunteers, including many faith-based and community
organizations, provide USDA commodities to the needy, either as
prepared meals in soup kitchens, or through food pantries as
commodities to be used by households. In addition, many TEFAP local
organizations actively seek donations of commodities from other
sources, including local grocery stores.
Question. What will you do for the 25 percent of the CSFP
participants who are already enrolled in the food stamp program and
would be losing a critical benefit?
Answer. CSFP recipients who are already enrolled in the FSP will
continue to receive monthly food assistance benefits and have access to
nutrition education services.
Question. Isn't it true that the FSP and CSFP are supplemental
programs that are meant to work with each other to ease the burden upon
our low income seniors?
Answer. The Food Stamp Program is the cornerstone of the national
nutrition safety net, and the largest elderly nutrition assistance
program, serving nearly 2 million seniors in an average month. Because
the CSFP operates in limited areas, some low-income elderly have access
to nutrition assistance through commodities and/or Food Stamps, while
most others must rely exclusively on Food Stamps for such help. In the
administration's view, ensuring adequate funding for programs that have
the scope and reach necessary to provide access to eligible people
wherever they may reside is a better and more equitable use of scarce
resources than to allocate them to programs that cannot provide access
to many areas of the country. For this reason, the administration has
placed a priority on funding Food Stamps, WIC, and other nationally-
available programs that provide benefits to eligible people wherever
they may live, including communities currently served by CSFP. Many
elderly CSFP participants are expected to be eligible for, and to make
use of the FSP, from which they may receive benefits that can be more
flexibly used to avoid conflicts with their individual dietary needs
and preferences.
Question. Why would you consider eliminating a program that has
grown by 15 States since 2000, has 5 States on a waiting list and has
current participating States asking for thousands of additional
caseload slots?
Answer. We face difficult challenges and decisions with regard to
discretionary budget resources and have chosen to not request funding
for this program for several reasons. Resources are not available to
permit CSFP to operate nationwide. In an era of fiscal constraint, we
must ensure that limited resources are targeted to those programs that
are available to needy individuals and families, regardless of the
communities in which they reside. The priority of the administration is
to ensure the continued integrity of the national nutrition assistance
safety net, including the Food Stamp Program and WIC.
Question. Some seniors have spoken that they prefer commodities to
food stamps as was shown during your pilot program, of commodities in
lieu of food stamps, in Connecticut and North Carolina. What do you say
to those seniors?
Answer. We recognize that some seniors prefer commodity packages to
food stamps. However, the Food Stamp Program is the Nation's primary
domestic nutrition assistance program for low-income households.
Because the CSFP operates in limited areas, some low-income elderly
have access to nutrition assistance through commodities and/or FSP,
while most others must rely exclusively on Food Stamps for such help.
In the administration's view, ensuring adequate funding for
programs that have the scope and reach necessary to provide access to
eligible people wherever they may reside is a better and more equitable
use of scarce resources than to allocate them to programs that cannot
provide access to many areas of the country. For this reason, the
administration has placed a priority on funding the Food Stamp, WIC,
and other nationally-available programs that provide benefits to
eligible people wherever they may live and offer flexibility in
benefits to meet their individual nutritional needs and preferences.
SUBCOMMITTEE RECESS
Senator Bennett. We thank you for your testimony, sir, and
for the expertise that you bring here. The next hearing of the
subcommittee will be with the Food and Drug Administration on
Tuesday, March 14 at 10 a.m., and the subcommittee is recessed.
[Whereupon, at 9:54 a.m., Thursday, March 9, the
subcommittee was recessed, to reconvene at 10 a.m., Tuesday,
March 14.]
AGRICULTURE, RURAL DEVELOPMENT, AND RELATED AGENCIES APPROPRIATIONS FOR
FISCAL YEAR 2007
----------
TUESDAY, MARCH 14, 2006
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
The subcommittee met at 10:05 a.m., in room SD-192, Dirksen
Senate Office Building, Hon. Robert F. Bennett (chairman)
presiding.
Present: Senators Bennett, Craig, Kohl, and Harkin.
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Food and Drug Administration
STATEMENT OF HON. ANDREW C. VON ESCHENBACH, ACTING
COMMISSIONER
ACCOMPANIED BY:
KATHLEEN HEUER, CHIEF FINANCIAL OFFICER AND ASSOCIATE
COMMISSIONER FOR MANAGEMENT
RICHARD TURMAN, DEPUTY ASSISTANT SECRETARY FOR BUDGET,
TECHNOLOGY, AND FINANCE, DEPARTMENT OF HEALTH AND HUMAN
SERVICES
STEVE SUNDLOF, DIRECTOR, CENTER FOR VETERINARY MEDICINE
OPENING STATEMENT OF SENATOR ROBERT F. BENNETT
Senator Bennett. The subcommittee will come to order.
And this morning, we are happy to welcome Dr. Andrew von
Eschenbach, who is the acting Commissioner of the Food and Drug
Administration. And we also welcome Ms. Heuer and Mr. Turman.
We appreciate very much your being here.
This is the second subcommittee hearing we have convened
since receiving the President's fiscal 2007 budget request, and
it is the first time that Dr. von Eschenbach has appeared
before the subcommittee.
The FDA did pretty well under the President's budget
process. The budget request, not including user fees and fiscal
2006 supplemental funding, represents an overall increase of
$70 million from the level of funding in fiscal 2006. Not all
portions of this subcommittee's budget did as well in terms of
the President's recommendations.
The FDA budget includes increases for pandemic influenza
preparedness, food defense, drug safety, tissue safety, animal
drug and medical device review, and a new initiative, called
the Critical Path Initiative, to speed development of medical
products.
But it does include more than $50 million in base funding
reductions. We have been given very little information about
the impact of these reductions, and I expect that we will
discuss those in some greater detail in the hearing this
morning.
Now given the fact that we are competing with other
subcommittees, had to fight your way down the hall to get
around the corner to come in here, and we are in the midst of
the budget discussions on the floor, we are going to keep
members to 5-minute rounds.
We will use the ``early bird'' rule. That is, Senators will
be recognized in the order of their arrival, and members will
be allowed to submit questions for the record. We want all of
the questions to the subcommittee to be here by the close of
business on the 24th of March.
Senator Kohl and I will be the only two to give opening
statements. And when we have finished with our opening
statements, then we will go directly to Dr. von Eschenbach for
his presentation and then begin the questioning rounds.
So with that statement of the ground rules, Senator Kohl.
Senator Kohl. I thank you, Mr. Chairman.
Dr. von Eschenbach, it is good to see here you here today,
and we also want to welcome Ms. Heuer and Mr. Turman as well as
the rest of your staffs.
There has been, as you know, lots of interest in your
budget, which appears to receive the most robust increase in
the entire agricultural appropriations bill. I am pleased to
see additional funding for drug and tissue safety as well as
avian flu and food defense.
Also in the budget, though, there is a redirection of $52
million and funding for some important activities and staffing
levels actually decreases. These decreased activities,
according to your budget, include generic drug contracts,
analysis of food import samples, compliance and recall
functions, certain safety activities in the biologics program,
dietary supplement activities, and inspections of veterinary
food and human drugs manufacturers.
This is not at all a complete list. This is obviously a
concern, and we are interested to know how the priorities in
this budget were determined.
We are hopeful that you will provide detailed information
on this redeployment as well as your budgeted increases here
today. And so, we look forward to your statement and the
opportunity to ask questions.
Thank you, Mr. Chairman.
Senator Bennett. Thank you.
Dr. von Eschenbach, your prepared statement has been
received and will be included in the record at this point in
its entirety. But we would appreciate it now if you would give
us a summary and whatever introductory comments you may wish to
make.
STATEMENT OF DR. ANDREW C. VON ESCHENBACH
Dr. von Eschenbach. Thank you, Mr. Chairman.
Good morning, Senator Kohl. And good morning, Senator
Craig, and other members of the staff.
I am very honored to be here as the acting Commissioner of
the Food and Drug Administration to present this 2007 fiscal
year budget. But most of all, to also have the opportunity to
thank you for the continued support and commitment that you
have made to the FDA in helping to assure that it continues to
be the gold standard around the world for the safety and
effectiveness of the interventions that we provide to people.
Our 2007 budget request proposes a total budget of $1.95
billion, of which $1.54 billion is in discretionary budget
authority and $402 million will be in user fees from the firms
that we regulate. These funds are precious, and they are, in
fact, essential to FDA's continuing effort to assure that
Americans can go to bed each night confident that the food they
ate is safe, the medical devices they use are reliable, and the
drugs that they gave to their children and grandchildren were
safe and effective.
As we developed this 2007 proposal, the first thing we
focused on was FDA's most precious asset, its people. The funds
we are requesting are essential for us to continue to recruit,
retain, and nurture a critical and diversified staff of highly
skilled professionals and scientists who make it possible for
the FDA to achieve the gold standard in regulating foods,
drugs, and medical products.
Our request includes $20 million for cost of living
increases that are essential to meet payroll obligations and
needed funds for the infrastructure to support our workforce
and consolidate FDA operations in modern facilities at White
Oak.
In addition to the workforce-related issues, we have also
focused on emerging urgent public health challenges and
opportunities. The increase of $30.5 million over fiscal year
2006 for pandemic preparedness is for a comprehensive program
that is designed to safeguard Americans from the danger of
avian flu by enhancing and integrating our programs across
vaccine development, antivirals, enhancement of devices for
detection as well as for human protection, and also include
issues with regard to animal welfare and human health.
The $20 million for food defense is to protect the Nation's
food supply both from intentional terrorist attacks as well as
to enhance our ability to safeguard the food supply from
unintentional contamination.
$4 million for human drug safety, plus an additional
$700,000 in user fees, we believe will strengthen our capacity
to recognize and act upon emerging drug safety concerns. And
the $2.5 million for human tissue safety is in response to the
dramatic growth that we are experiencing in the use of tissues
for transplantation and the anticipation of the emerging
challenges that will come from tissues obtained through
bioengineering.
With regard to the request for $6 million for the Critical
Path to Personalized Medicine, this initiative is an essential
investment, an investment in FDA's ability to respond to the
explosion in molecular medicine that is responsible for and
resulting in progress toward new treatments, diagnostics, and
preventive interventions.
By using the science and technology of the 21st century,
Critical Path will help ensure that FDA can guide these new
discoveries through the development process so that they are
able to be delivered to patients in a rapid, safe, and
effective manner.
A modern, robust Critical Path will lead to solutions that
will deliver on the promise of making our future health care
personalized, predictive, preemptive, and, in fact, more cost
effective.
As you have indicated, to partially offset the cost of
these initiatives and, most importantly, as good stewards of
the resources that you have already provided, FDA has undergone
a process to identify and an activities for opportunities for
efficiencies and proposes to strategically redeploy $52 million
in base funds.
We have done this, first and foremost, with the principle
to not undermine or impair our commitment to public health. But
we believe by looking at opportunities within the portfolio to
determine where there are programs that could be effectively
carried out by alternative or other strategies, where there are
opportunities to eliminate waste and maximize the impact of our
investment, we believe that we can modernize and transform our
business operations, as well as our programmatic operations, to
address the emerging needs of the 21st century.
We will accomplish this strategic redeployment while
assuring you that we will maintain our century-old commitment
to assuring the health and welfare of the American public.
There are two new user fees that are being proposed. One
covers the cost of re-inspecting facilities that fail to meet
standards, and the second would cover the cost of issuing food
and animal feed export certificates.
As you have pointed out, the investment in the FDA in this
budget is investment in the future of our country and our
commitment to continue to ensure the health and safety of the
American public. We propose to use these resources wisely and
carefully as good stewards and, in doing so, assure a healthier
America for generations to come.
PREPARED STATEMENT
We really are grateful and appreciate your commitment and
your interest to working together with us, as we will with you,
to be sure that we fulfill that goal.
[The statement follows:]
Prepared Statement of Dr. Andrew C. Von Eschenbach
Introduction
Good morning Chairman Bennett, Senator Kohl, and distinguished
members of the Subcommittee. I am very honored to have been appointed
by President Bush 6 months ago as Acting Commissioner of the FDA, and I
consider it a privilege to present our fiscal year 2007 budget request
on behalf of this extraordinary agency. I am joined today by Ms. Kathy
Heuer, FDA's Chief Financial Officer and Associate Commissioner for
Management, and Mr. Richard Turman, Deputy Assistant Secretary for
Budget, Technology, and Finance of the Department of Health and Human
Services (DHHS). I also have members of FDA's senior leadership with me
at today's hearing.
Last September, President Bush selected me to lead an agency to
which I appreciate, we, as Americans owe a great debt of gratitude.
Millions of Americans go to sleep each night, secure in the knowledge
that the food they ate and the medicines they gave their child were
safe and effective. They do so, thanks to the thousands of dedicated
professionals at FDA who work to assure the safety, efficacy, and
security of drugs, vaccines and biological products, medical devices,
our Nation's food supply, and other consumer products.
This year, the Food and Drug Administration will celebrate its
100th birthday, marking a century as America's gold standard for safety
and consumer protection. We began in 1906, when Congress passed and
President Theodore Roosevelt signed the Food and Drugs Act. This
statute entrusted the Bureau of Chemistry, an office in the U.S.
Department of Agriculture, to implement the sweeping new law. The
Bureau eventually became the FDA, an agency of the Department of Health
and Human Services. As the first consumer protection agency in the
United States, FDA has a distinguished record, established during its
100 years of service to the American public.
Today, the products we regulate represent almost 25 percent of U.S.
consumer spending and include 80 percent of our food supply and all
human drugs, vaccines, medical devices, tissues for transplantation,
equipment that emits radiation, cosmetics, and animal drugs and feed.
FDA takes great pride in its heritage and accomplishments, promoting
and protecting the health and well-being of all Americans.
I assure you that the precious resources you provide this agency in
fiscal year 2007 will be used wisely and judiciously to ensure that we
maintain this record of excellence, as well as work to respond to the
growing challenges to advance the Nation's public health in a new era
of rapidly developing science and individualized medicine.
I want to thank the Subcommittee members for providing FDA with
several key increases in the fiscal year 2006 appropriation. The
Subcommittee demonstrated its commitment to FDA's mission by providing
increases for drug safety, the Critical Path Initiative, review of
direct-to-consumer advertising, Food Defense, medical device review,
and the FDA consolidation project at White Oak, Maryland. In addition
to the amounts in the annual appropriations bill, I also want to
express my thanks to Congress for the supplemental appropriation of $20
million to contribute to our Nation's preparedness for the threat of
pandemic flu. FDA enters this appropriation cycle mindful of our
responsibility and stewardship, and that all Federal agencies must
operate in an environment where our dollars must go to the greatest
need.
FDA's 2007 President's Budget Request
In our fiscal year 2007 budget, the Administration proposes a total
program level for the FDA budget of $1.95 billion, an increase of 3.8
percent above the fiscal year 2006 amount. This includes $1.54 billion
in discretionary budget authority and $402 million in current law user
fees. Our budget also includes $25.5 million for two new user fees. Our
budget request maintains critically important core functions and
demonstrates that our programs meet a firm test of accountability. At
the same time, we are heeding the President's call to assure continued
progress by fostering innovation and focusing on emerging priorities.
In fiscal year 2007, FDA will employ resources to advance its mission
to protect the public health by assuring the quality of food and
medical supplies and by implementing advanced technologies to monitor
and speed innovations to market that will make foods safer and medical
products more effective, safer, and more affordable. We will also
implement advanced tools to ensure that the medical community can use
molecular biology to improve outcomes for patients. We must accomplish
these goals in a way that provides the public with the accurate,
science-based information they need to use food and medicine to improve
their health.
The President's budget focuses on six emerging, and urgent
challenges and opportunities. To address these challenges, the budget
proposal increases funding in these targeted activities above the
amount provided in fiscal year 2006: $30.5 million for Pandemic
Preparedness, $19.9 million for Food Defense, $5.9 million for the
Critical Path to Personalized Medicine, $4.0 million for Human Drug
Safety (plus an additional $0.7 million in user fees), $2.5 million for
Human Tissue Safety, and $7.4 million to meet the statutory triggers of
the Animal Drug and Medical Device user fee programs. In addition to
these high priority initiatives, the budget requests $20.3 million for
inflationary cost-of-living increases that will enable the agency to
recruit, nurture, and retain a critical mass of highly skilled
professionals and scientists. This dedicated staff is necessary to
respond to greater challenges in the regulatory process, including
increased complexity of the sciences and technology and the need for a
more rapid pace.
FDA also seeks $1.2 million for the Unified Financial Management
System, and an investment of $14.3 million for the agency's
infrastructure needs. To partially offset the cost of these
initiatives, the President's budget proposes to strategically redeploy
$52.3 million in base funds. Even in an era of declining budgets, FDA
recognizes the need to modernize and transform operations to address
the emerging needs of the 21st century. Therefore, we engaged in an
ongoing process to strategically redeploy resources to address high-
risk public health challenges while maintaining our century-old
commitment to principles that have made us the world's ``gold
standard'' for regulating food and medical products. In doing so, the
proposed budget will permit FDA to meet its ongoing statutory and
regulatory responsibilities, while allowing us to initiate new and
expanded efforts in critical areas of our mission. Now I would like to
provide you with greater detail on our proposed budget increases.
Pandemic Preparedness (+$30.5 million)
To safeguard Americans from the danger of pandemic influenza, FDA
requests a total base program of $55.3 million in fiscal year 2007.
This amount is $30.5 million more than the fiscal year 2006 enacted
level, which includes the $20 million in supplemental appropriations
provided by Public Law 109-148. The supplemental will allow FDA to
rebuild and enhance its infrastructure; provide personnel and expertise
in the essential clinical, product and manufacturing areas necessary to
support new vaccine development for pandemic influenza. With the fiscal
year 2007 funds, we will conduct a more comprehensive program to
prepare for and respond to the risks of a pandemic flu outbreak. The
resources will build upon the program this Congress launched in the
supplemental, and will allow FDA to:
--Engage in public-private partnerships to select, prepare, and test
pandemic seed strains of variants of the H5N1 virus.
--Develop reagents (used to assess vaccine potency) that are
essential for successful large-scale manufacturing.
--Evaluate and license flu vaccines that rely on current egg-based
technology as well as encouraging the development of new
approaches such as cell culture-based vaccines, recombinant
vaccines, and vaccines that contain adjuvants--substances added
to vaccines to stimulate an immune response.
--Provide essential technical support to vaccine manufacturers
throughout the vaccine development process, including support
throughout the manufacturing phase.
--Develop analytical methods to detect, identify, and quantify
antiviral residues in poultry, so that these drugs do not
promote drug resistance in humans.
--Develop and validate methods to detect avian influenza in foods and
advise American consumers about how to safely handle and cook
these foods.
We make this request because public health experts tell us that the
risks of being unprepared for a pandemic could mean the death of up to
200,000 Americans (based on a medium-level pandemic scenario) and
economic losses of up to $160 billion. In the near term, our pandemic
initiative will stimulate broader interest among vaccine manufacturers,
as they recognize that FDA will provide consistent technical support to
overcome vaccine development hurdles. We have already seen results in
this area. In the longer term, our fiscal year 2007 investment will
yield essential seed strains and reagents, and allow us to transfer
this technology to manufacturers, while we also perform our regulatory
responsibilities of evaluating and licensing pandemic influenza vaccine
products. Over the next 2-4 years, we will also fulfill our public
health responsibilities related to foods and veterinary products, by
delivering methods to detect antiviral residues and by educating
Americans about safe food practices.
Food Defense (+$20 million)
FDA seeks an investment of an additional $20 million in fiscal year
2007 to protect the Nation's food supply from terrorist attack, by
developing and deploying improved methods to screen food and feed
imports and expanding the Food Emergency Response Network (FERN).
FERN is a network of Federal and State laboratories designed to
ensure that we have the analytic surge capacity to respond to an attack
on the food system. By the end of fiscal year 2006, we plan to have an
operational FERN system of 10 Federal and 10 State labs. The fiscal
year 2007 funds ($13 million) will allow FDA to expand the current
network by six additional labs, located at existing State facilities,
and we will work to bring these on-line before the end of the fiscal
year. We will fully equip these new labs, and provide operational
funding and technical assistance so that they can conduct food defense
activities. Our technical assistance will include proficiency testing
on the new equipment and training to validate their ability to conduct
food testing in response to an emergency. The result of this investment
will be a more robust and more geographically diverse capability to
provide the essential surge capacity to test contaminated food samples
and allow us to warn the public about threats to the food supply. By
working cooperatively with State facilities, we can stretch our Federal
dollars and strengthen food defense at the Federal and State level.
Within the $20 million increase, we will also:
--Conduct food defense research ($1 million) to fill in gap areas
that we identified in the vulnerability assessments we
conducted on 23 major food products such as baby food, infant
formula, dairy products, soft drinks, and bottled water.
--Strengthen the Electronic Laboratory Exchange Network (eLEXNET), an
Internet based data exchange system used by Federal, State, and
local government food safety laboratories. Using fiscal year
2007 funds, we will use eLEXNET to provide food sector-specific
information to sister agencies and build a secure interface so
that we can exchange data with DHS. Finally, we will purchase
essential reagents and test kits to conduct biomonitoring
surveillance. In fiscal year 2007, we will spend $2 million of
the Food Defense increase for these activities.
--Improve our Emergency Operations Network ($1 million) to allow FDA
to conduct more sophisticated incident tracking for food-
related emergencies.
--Continue Field support of food defense operations ($3 million),
including the targeting of potentially high-risk imported foods
through Prior Notice Import Security Reviews based on
intelligence, FDA inspection reports, discrepancies in prior
notice reporting and sample collection and analysis.
Critical Path to Personalized Medicine (+$5.9 million)
FDA requests an increase of $5.9 million in fiscal year 2007 for
the Critical Path to Personalized Medicine initiative. This will allow
us to increase the predictability and efficiency of developing new
medical products, and deliver greater benefits to patients as we
accelerate the field of personalized, predictive, preemptive, and
participatory medicine. Our goal is to stimulate a new generation of
scientific tools that will enable product sponsors to evaluate and
predict the safety and effectiveness of drugs. This will permit
physicians to tailor therapies to individual patients and avoid
potentially dangerous adverse events. The Critical Path to Personalized
Medicine Initiative also fulfills the Congress' expectation under the
Food and Drug Administration Modernization Act, when it charged FDA to
work collaboratively with partners in government, academia, and
industry to advance medical product development. A modern, robust
Critical Path will lead to solutions that will deliver on the promise
to make our future health care, personalized, predictive, preemptive,
and more cost effective.
The fiscal year 2007 investment will support:
--Imaging Initiative.--Our Critical Path investment will support
efforts to accelerate an understanding of the use of positron
emission tomography (PET) and other advanced imaging
technologies as surrogate endpoints for developing new cancer
drugs. A surrogate endpoint helps to predict the benefit that a
patient may experience from therapy. In fiscal year 2007, we
will participate in developing technical standards for PET
imaging--the tools that will enable drug developers to evaluate
and improve the effectiveness of new products.
--Improving Stent Design.--Cardiovascular disease is a significant
cause of morbidity and mortality in the United States, and drug
eluting stents have become a standard therapy to address
cardiac disease in many patients. Today, most vascular stents
eventually fail and alternative designs are difficult to test
in humans. Our objective is to improve stent performance and
safety by predicting and avoiding product failures. In fiscal
year 2007, we will develop the preliminary components of a
simulation model of drug eluting stent behavior in adults and
children. Also in fiscal year 2007, we will work to develop
open source imaging software to assess stent performance and
begin to develop guidance for industry on using the simulation
model to predict stent performance.
--ECG Warehouse.--We will invest funds to develop the tools to permit
searches of electrocardiogram (ECG) data submitted with drug
applications so that we can identify cardiovascular risk
patterns associated with unsafe drugs. We will also partner
with academia and the public sector in fiscal year 2007 to
conduct additional ECG analyses. This will improve our ability
to identify cardiac safety concerns before we approve a drug
for marketing and also detect post market safety signals.
Through these activities, we will help ensure that therapies
are safe and effective, and we will improve outcomes for
patients who are using products that are already on the market.
The need for new medical treatments and the investment of billions
of dollars in basic biomedical research led many in the medical
community to anticipate a new wave of medical products capable of
dramatically saving and extending lives. Yet the recent slowdown in the
rate of new medical treatments actually reaching patients is a
significant concern at FDA. Products fail before they reach the market
because clinical trials fail to demonstrate safety or efficacy, or they
cannot be manufactured at a consistently high quality. Despite recent
innovations, many serious and life-threatening diseases still lack
effective treatments.
At FDA, we witness the full spectrum of drug, device, and biologic
product development. From this unique perspective, it is clear that the
development of evaluative scientific tools to utilize in medical
product development has not kept pace with the rapid advances in basic
sciences. The path from cutting-edge medical discovery to the delivery
of safe and effective treatments is long, arduous, and uncertain--and
it does not yield extensive information on product performance. To
correct this imbalance, FDA initiated the Critical Path to Personalized
Medicine, a program designed to modernize medical product development
to ensure more efficient and more informative product development and
clinical use. FDA considers the Critical Path Initiative to be its top
scientific policy initiative for at least the next 5 years.
FDA's Critical Path Initiative will stimulate research community
efforts to identify the essential biomarkers and improved clinical
trial designs that will accelerate product development. Biomarkers are
measurable characteristics that reflect physiological or disease
processes. Medicine can use biomarkers to predict or monitor response
to therapy. The initiative will generate essential information to
identify patients likely to benefit from a treatment and patients more
likely to respond adversely to a product. Without clinically proven
biomarkers and innovative trial designs, we cannot modernize medical
product development and realize the potential of personalized medicine.
The subcommittee recognized this need when it appropriated funds for
FDA in fiscal year 2006 to study cardiovascular biomarkers predictive
of safety and clinical outcomes, and the funds that we request in
fiscal year 2007 will support broader efforts to achieve personalized
medicine.
Drug Safety (+$4.7 million in budget authority and user fees)
FDA will build on recent improvements to its drug safety activities
with an fiscal year 2007 increase of $4.7 million (a $3.96 million
increase in budget authority and $0.74 million in PDUFA user fees). The
proposed fiscal year 2007 budget will provide a significant increase to
our base resources for drug safety and will allow FDA to continue to
strengthen our capacity to recognize and act on emerging drug safety
concerns.
As we plan for fiscal year 2007, we must continue to focus on the
needs of the patient. We must constantly ask ourselves--how can we
achieve the proper risk/benefit balance while speeding patient access
to safe and effective products? U.S. pharmacies fill approximately 3.7
billion prescriptions per year and consumers make more than 5 billion
over-the-counter drug purchases annually. The effect of these medicines
on the full spectrum of our population causes unforeseen problems to
surface that may not have appeared during the sometimes-lengthy drug
review process.
Our fiscal year 2007 drug safety request will permit us to launch a
web-based system that provides agency analysts faster access to adverse
event reports. Known as AERS II, this system will allow FDA to more
easily evaluate potential safety issues, and improve our ability to
take follow-up actions to protect patients. Fiscal year 2007 funding
will also allow us to analyze valuable drug safety information housed
in CMS and other population-based databases and to conduct studies of
high priority safety issues in the Medicare population. Studies
conducted on these types of databases will provide more supporting
evidence about drug use under a broader range of conditions, and more
detailed evidence about drug safety in subgroups of patients, such as
the elderly, and in patients with multiple medical conditions. This
will provide FDA with many of the tools necessary to formulate and
communicate safety information to health care practitioners, consumers,
and the research community in a more timely and user-friendly way.
We have made important drug safety enhancements during the past
year, and I would like to highlight these activities for your now. The
members of this Subcommittee provided an increase of $9.9 million in
FDA's fiscal year 2006 budget. We will bolster premarket and postmarket
drug safety functions by using these funds to:
--Increase the professional staff in FDA's Center for Drug Evaluation
and Research (CDER) who perform high priority drug safety
reviews.
--Increase the number of staff with expertise in critical areas, such
as risk management, risk communication, and epidemiology.
--Expand our information technology infrastructure for monitoring
post-marketing data by increasing access to a wide range of
clinical, pharmacy, and administrative databases.
--Hire additional experts to enhance use of multidisciplinary, multi-
office teams to interpret drug safety data.
--Access external population-based ``linked'' databases to identify
drug safety signals.
Other important drug safety accomplishments during the past year
include:
--Establishing a Drug Safety Oversight Board to provide independent
oversight and advice on drug safety and disseminating safety
information. The Board conducted 5 meetings in 2005 to discuss
17 drug products with potential risks.
--Appointing a new director of CDER's Office of Drug Safety.
--Conducting a public meeting of experts to assess risk communication
about drugs and to plan future communication efforts.
--Unveiling a major revision to the format of prescription drug
information, commonly called the package insert, to give
healthcare professionals clear and concise prescribing
information.
These efforts emphasize our commitment to providing the American
public with safe and effective medical products.
Tissue Safety (+$2.5 million)
FDA requests an increase of $2.5 million to provide the essential
resources to support a human tissue safety, including our role in
monitoring the expanding field of tissue transplantation and the
emerging challenges of bioengineering. These funds will allow the
agency to:
--Commence a comprehensive risk-based approach to assure the safety
and quality of human cells, tissues and cellular and tissue-
based products used for transplantation. Examples include
corneas, heart valves, ligaments, joints, skin, or other
tissues.
--Promptly monitor and investigate adverse events and tissue product
problems.
--Take early action to improve tissue practices and prevent tissue-
related injuries and deaths.
--Educate industry, the medical community, and the public about human
tissue safety.
--Support promising new technologies that use cells and tissues,
including therapies for diseases such as cancer, AIDS,
Parkinson's disease, hemophilia, diabetes, and other serious
conditions.
This program will provide guidance and predictability to more than
2,000 registered establishments that process and distribute tissue
products used in medical procedures that save or enhance the lives of
recipients. FDA has seen its workload in the area of human tissue
transplants rise dramatically as transplants have increased from
approximately 350,000 in 1990, to more than 1,000,000 annually. The
number of transplants will continue to rise in the years ahead.
With these resources, FDA will conduct 75 additional tissue
inspections in fiscal year 2007 and thereby increase our annual
inspection coverage to 325 facilities. Through inspection and
monitoring activities, we can ensure that establishments demonstrate
safety and efficacy of their products. These funds will also permit FDA
to rapidly review, track, and analyze tissue deviation reports.
Finally, we will issue guidance for industry on emerging issues
relating to the eligibility of donors and good tissue practices. The
goal of these efforts is to ensure safe outcomes for patients when they
receive tissue transplants.
FDA's announcement in early February that we ordered a New Jersey
company to cease operations is evidence that we will take action to
protect the public health against tissue manufacturers that fail to
follow safety requirements. This is an example of the targeted
enforcement action we will conduct to protect the public health when we
have evidence unsafe tissue practices.
Budget Authority in Support of User Fee Programs--MDUFMA and ADUFA
(+$7.4 million)
To achieve more timely and cost-effective review of new medical
devices and animal drugs, we continue to implement Medical Device User
Fee and Modernization Act (MDUFMA) and the Animal Drug User Fee Act
(ADUFA). Congress enacted these statutes to allow the agency to collect
user fees from companies that submit medical device and animal drug
applications.
In fiscal year 2007, we are requesting a total increase of $7.4
million in new budget authority ($4.9 million for medical devices and
$2.5 million for animal drugs) to ensure that we meet statutory
requirements, known as triggers, and fulfill the fiscal year 2007
performance commitments under these programs. If we do not receive
sufficient budget authority to meet the statutory triggers, FDA will
lose the right to collect $55.3 million in user fees. The flow of
potentially life saving medical devices will decline and the use of
unapproved drugs in food-producing animals will likely rise.
Under both these user fee programs, we pursue a complex and
comprehensive set of product review goals. Each year brings additional
goals, and the goals become more aggressive. FDA provides a complete
report on its performance on under these programs at the end of each
year.
The proposed increase will permit FDA to maintain its highly
skilled scientific and professional review staff and conduct speedier
review and approval of safe and effective medical devices. Under
MDUFMA, FDA is meeting, or is on track to meet, nearly all of the
performance goals for fiscal year 2003, fiscal year 2004, and fiscal
year 2005. We will continue to make program improvements to ensure we
meet the goals for fiscal year 2006 and fiscal year 2007. Under ADUFA,
FDA expects to meet or exceed all performance goals.
Cost of Living--Paying our People (+$20.3 million)
Soon after the President appointed me Acting Commissioner, I told
my FDA colleagues that the well-being of our agency's employees was one
of my top priorities. The talented and dedicated FDA employees are the
agency's most precious asset and are the primary reason for our
success.
The proposed increase of $20.3 million to meet inflationary pay
costs is essential to FDA's ability to accomplish its public health
mission. Payroll costs account for more than 60-percent of the FDA
budget, and the Agency is not able to absorb inflationary increases on
such a significant portion of its resources. These funds will allow FDA
to maintain its world-class workforce and achieve the promise of a
healthier America.
FDA's diverse portfolio of pubic health responsibilities demands
that we maintain a large cadre of scientists and professionals with the
training and experience to respond to complex and escalating public
health challenges. This workforce is directly engaged in both
developing the science of regulation as well as administering
regulatory functions.
FDA professionals are increasingly challenged by evolving food
defense responsibilities as well as growing responsibilities in
regulation of vaccine, drug, and device, development. Within the past
year, they have addressed threats such as BSE (Mad Cow Disease),
Salmonella, West Nile Virus, and pandemic flu. The FDA workforce
reviews, approves, and continues to ensure the safety and effectiveness
of products to manage cancer, diabetes, and heart disease, as well as
oversee products intended to preserve health. FDA principally expends
its budget for payroll that allows us to recruit and retain a skilled
workforce dedicated to safeguarding the public using advanced tools to
preempt public health threats.
Unified Financial Management System (UFMS) (+$1.2 million)
In fiscal year 2007, FDA seeks an increase of $1.2 million to fully
utilize the Unified Financial Management System (UFMS) for all of our
financial transactions. These funds will allow FDA to achieve a major
program milestone in the implementation of a new centralized financial
management system under the Department of Health and Human Services
(HHS). These additional funds would bring the fiscal year funding level
to $14.1 million.
UFMS is changing the way HHS agencies do business at it improves
efficiencies in business processes and technology It will replace five
redundant and outdated accounting systems in use at the National
Institutes of Health, the FDA, the CDC, the Centers for Medicare and
Medicaid Services, and the DHHS Program Support Center. The requested
increase and the base funds in our budget will support dual functions.
First, as a component of the Department-wide system, FDA resources will
support testing and integration of the UFMS system, as well as regular
operation and maintenance of UFMS. Second, fiscal year 2007 funding
will support FDA-specific functions such as the purchase of reporting
tools and software licenses, essential system upgrades and new software
releases, and training to support FDA users of this new system. This
will ensure that we satisfy financial requirements and provide timely
financial information to executives and managers to support better
decision making. As FDA fully integrates UFMS into our systems and way
of doing business throughout fiscal year 2007, we expect to witness the
projected efficiencies for this vital enterprise and be able to use
UFMS' full financial management capability.
Infrastructure (+$11.3 million)
In fiscal year 2007, FDA submits a modest request to fund three
fundamental components of our physical infrastructure:
--An increase of $10.5 million for rent payments to the General
Services Administration (GSA).
--An increase of $3.8 million in budget authority to maintain
progress on the White Oak Consolidation project.
--A reduction of nearly $3 million below the fiscal year 2006
appropriated level for our Buildings and Facilities account.
In total, these proposals would result in a net increase of $11.3
million for fiscal year 2007.
We also plan to commit $8.2 million in PDUFA carryover funds to the
White Oak project and $1.9 million for GSA rental payments. FDA
continues to seek support for the White Oak project with the goal of
eventually housing over 7,700 staff in 2.3 million square feet of
space. As of the end of calendar year 2005, we have approximately 1,850
staff on site at White Oak, in three buildings with almost 700,000
square feet. The new buildings will eventually replace all 40 existing,
fragmented facilities in 16 locations that support the Office of the
Commissioner, and all of our Centers and the Field headquarters, other
than the Center for Food Safety and Applied Nutrition and the National
Center for Toxicological Research.
Proposed User Fees: Reinspection and Food/Animal Drug Export
Certificates ($25.5 million)
In addition to those user fees authorized by statute, the FDA is
proposing two new user fees. The first, estimated at $22.0 million,
would pay the full cost of reinspection and other FDA follow-up work if
a manufacturer fails to meet important FDA requirements such as Good
Manufacturing Practices, which help ensure high quality and safety of
FDA regulated products. When a firm fails an inspection, FDA must
conduct a reinspection and perform associated laboratory analysis to
verify the firm's corrective measures.
The reinspection user fee will ensure that facilities that fail to
comply with established health and safety standards bear the cost of
FDA follow-up inspection. We are asking Congress to assess the cost of
follow-up inspections on those who fail to comply, rather than on the
American taxpayer, who bears the cost today. The natural consequence of
this change will be that manufacturers will work to ensure that they
meet established standards.
The second proposed new user fee will cover the cost of issuing an
approximately 37,000 food and animal feed export certificates. We have
estimated the cost of this user fee program at $3.5 million. Although
the agency's effort to issue these certificates benefits industry
exports, FDA must support this function at the cost of other vital
public health activities. FDA's proposal for user fees would establish
a source of dedicated funding for this activity and allow the agency to
better perform this function. The domestic food and animal feed
industry would benefit from the agency's enhanced ability to facilitate
the exportation of their products.
The Federal Food, Drug, and Cosmetic Act (the Act) authorizes FDA
to collect user fees for export certificates for human drugs, animal
drugs, and devices. However, this authority does not extend to
collecting user fees for export certificates for foods and animal feed.
FDA expends significant resources annually to issue these certificates,
and the agency needs to focus its resources on activities that are
central to its public health mission. The Administration has asked that
Congress fund these two user fee programs with mandatory budget
authority.
Current Law User Fees (+$20.2 million)
We are also requesting an increase of $20.2 million for user fees
that support prescription drug review, medical device review, animal
drug review, mammography inspections, export certification, and color
certification fees, for a total fiscal year 2007 user fee level of $402
million. These fees enable FDA to review medical products in a timely
manner and reimburse FDA for two services (color certification and
export certification for human drugs, animal drugs, and devices) that
we provide to industry. All of these requested fee increases are
authorized under current law. In fiscal year 2007, FDA will work with
Congress on the reauthorization of the PDUFA, MDUFA, and ADUFA user fee
programs.
Closing
Mr. Chairman, I look forward to working with you, members of the
Subcommittee, and your staffs to maximize FDA's resources in the best
interest of the American people and our country as we move into fiscal
year 2007. The agency's program level request of $1.95 billion is
necessary to perform our mission--established by Congress a Century
ago--to protect and promote the health and safety of the American
public. At the Food and Drug Administration, we work tirelessly to
fulfill these public health responsibilities. Our goal is to maximize
the benefits and minimize the risks from the products we regulate.
Among my highest priorities as Acting Commissioner--for as long I
am privileged to serve at the helm of FDA--will be to foster the
development of the FDA of the 21st Century. Building on the success of
the past, we will maintain our ``covenant of trust'' with patients and
the public. We will assure they have safe, effective, modern, and cost
efficient solutions for the challenges to their health and well-being,
and the health and well-being of their children and grandchildren. A
well managed and adequately funded FDA will mean a healthier America
for many generations to come.
STRATEGIC REDEPLOYMENT
Senator Bennett. Thank you very much.
You talk about reprogramming and redirecting the $52
million. Would you please provide for the record more specific
information on each program that you plan to either reduce or
eliminate and the impact this will have?
Dr. von Eschenbach. Yes, sir. We will be very pleased to
provide that for the record in significant detail.
[The information follows:]
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
Senator von Eschenbach. We have gone through the entire
portfolio across the various centers and offices with the FDA,
worked extensively with the staff within those offices to look
for those opportunities and those efficiencies where we could
leverage, synergize, and partner, and we will provide the
detail for each of those particular parts of the portfolio for
you.
PANDEMIC INFLUENZA
Senator Bennett. All right. Thank you.
Last night, as I was watching television, which I don't
often do--the news programs on television strike me as being
more fictional than the sitcoms in many cases--running across
the bottom of one of them was constant reference to Secretary
Leavitt's warning with respect to pandemics.
And you discussed pandemic influenza preparedness at some
length in your testimony, and we provided $20 million for
pandemic preparedness in fiscal 2006. Now you are asking for an
additional $30 million.
For those who do watch television and the streamer that
runs across the bottom, could you discuss FDA's overall role in
preparing for a pandemic and kind of tell us what you see in
that whole area coming ahead for us?
Dr. von Eschenbach. Thank you, Mr. Chairman.
I believe your question points out a very essential and
critical element in our overall plan for a pandemic, and that
particular element is the essential role that the FDA must play
across a large portfolio of opportunity.
The role being to make certain that we are proactively
helping to develop and to approve vaccines, antivirals and,
devices that could be used for diagnostic purposes as well as
devices that may have to be used ultimately with regard to
human protection and support. And the important area that needs
to be included in the portfolio, and that is the attention that
needs to be paid to food animal.
In each of these areas, FDA plays and must continue to play
a critically important role in that process. We are engaged,
for example, in working proactively with companies in the
industry to help stimulate the development of vaccines, to help
them improve current vaccine production capabilities, including
the utilization of cell-based techniques in addition to the
traditional egg-based techniques that have been used.
Senator Bennett. Let me interrupt you there quickly because
I have been contacted by an American company that works on the
issue of cell-based techniques as opposed to egg-based. And I
want to call your attention to the fact that there are American
companies that are in this field, and there has been concern
raised about contracts being given overseas that are primarily
to egg-based fixes, while there are American companies that
complain that they are being overlooked.
And I would ask you to pay personal attention to that as we
go forward because it has to do with volume.
Dr. von Eschenbach. I certainly will continue to look into
that, as will the rest of the agency, and pay very close
attention to that. Because our commitment is to broaden the
portfolio as widely as possible to make as many opportunities
and options available with regard to the development of new
vaccines, specifically directed to H5N1.
With regard to antivirals, just as an example of the FDA's
commitment, we are actively looking at opportunities to enhance
shelf life of antivirals such as Tamiflu, which would
significantly increase and enhance our abilities with regard to
stockpile.
In devices, we work collaboratively with the CDC and
recently approved in a very rapid period of time a diagnostic
device, which can be used in processes of screening and looking
for the first and earliest signs of H5N1.
And one of the areas I have pointed out which we needed to
include into the FDA's commitment, and where a significant
amount of the new funds are being directed, has to do with
issues with regard to animal welfare, including the ability to
regulate how animals will be used and making sure that we check
and look for residue or traces of antivirals because we are
concerned about the development of resistance in animals and
humans.
But also should there be an outbreak or pandemic of avian
flu within our bird population, the destruction of those food
animals places the FDA in a critically important role with
regard to regulating the processes of destruction and assuring
that there is no contamination and risk for human health.
So it is a very broad portfolio, and we initiated after I
arrived at FDA an integrated task force within FDA so that all
these parts and pieces are now being coordinated and integrated
into a cohesive effort so that FDA contributes appropriately to
the larger initiative being carried out at the Department of
Health and Human Services and in other agencies.
Senator Bennett. Thank you very much. I would note that the
company that contacted me is not located in Utah.
Senator Kohl.
Senator Kohl. Thank you, Mr. Chairman.
GENERIC DRUGS
Dr. von Eschenbach, the FDA plans to spend over $400
million to approve approximately 88 new brand-name drugs and
just $65 million to approve over 400 new generic drugs in
fiscal year 2007. There are currently over 800 generic drugs
waiting to be reviewed at FDA, and the generics waiting list is
expected to grow, as you know.
Now I understand the importance of reviewing and approving
new drugs. They are often breakthroughs in the treatment of
disease. However, according to the Congressional Budget Office,
generic drugs on the market now save consumers an estimated $8
billion to $10 billion a year at retail pharmacies, and this
doesn't include the money saved when they are used in
hospitals.
As you know, they bring a big bang for the buck. And while
the backlog continues to grow, your budget doesn't seem to make
any effort to reduce that backlog. It seems that a relatively
small increase, especially in relation to the money you spend
to approve brand-name drugs, could make a big dent with respect
to generics. How do you answer that?
Dr. von Eschenbach. Thank you very much, Senator Kohl, for
addressing what we believe is a very important and critical
issue.
As you point out, we do want to continue to be sure that we
are nurturing and supporting the innovative opportunities to
continue to bring new solutions to patients, especially based
on the progress that is being made in biomedical research and
molecular medicine. At the same time, however, we are equally
committed to being certain that we can provide access to
patients to a wide portfolio of these drugs, including the
availability of generics.
Over a period of time, we have a commitment to the generic
program using all of the dollars that have been authorized for
that purpose and have seen a continuous increase in the number
of generics being approved each year. It is also true that the
number of applications have also continued to increase.
We are attempting to address this problem in a variety of
ways. First, we are giving priority to the first generic
available. That is enabling us to assure that at least across
the entire portfolio, Americans have access to one alternative
to the innovator drug.
In fact, we believe that program has been successful, to
the extent that we are approving first generics almost
simultaneously with patent issues having been resolved. We have
narrowed any gap between the legal barriers and the regulatory
barriers making those drugs available to patients.
With regard to volume, we are at a point now where we are
approving more than one generic drug on the average every day.
Having said that, we also recognize the need for continuous
improvement in the process, to continue to expand our ability
to grow the portfolio to alleviate the backlog.
We are directing more people to the effort of the approval
process. We are working with manufacturers to enhance the
quality of their submissions in order to reduce cycle time to
approval.
Most importantly, we are improving our own internal
processes, especially by moving from paper-based regulatory
approval processes to electronic based. And we believe this
electronic infrastructure will be a significant step forward in
enhancing the rapidity of our ability to process these
applications and eliminate the backlog.
GENERIC DRUG BACKLOG
Senator Kohl. In spite of all of that, there are 800
generic drugs waiting to be reviewed and approved at the FDA,
and that waiting list is expected to grow. So why don't we find
a way, understanding how important these generic drugs are in
helping people save money, why don't we find a way to more
quickly address this backlog?
Do you see that as a high priority that you want to get at,
or is it business as usual?
Dr. von Eschenbach. No, sir.
Senator Bennett. If I could just do the math? If they have
800, and they are doing one a day, and they don't work
Saturdays and Sundays, that is about 3 years of backlog.
Senator Kohl. Thank you.
Dr. von Eschenbach. Senator, let me approach the question
in the following way. We are committed, as you are, to being
able to expand the portfolio of access to various solutions for
the American people. And to do that, I believe really requires
a process improvement. It is a way of looking at this entire
continuum and looking for places in which we can improve cycle
time, where we can improve the ability to move larger volumes
of these applications more effectively through the system.
And as I indicated, the strategies that we are embarking
upon are more people, more effective means of processing
applications, including electronic submissions and electronic
review, and working more collaboratively and proactively with
the manufacturers of these generics in order for them to be
able to enhance their applications and improve the application
process.
We believe that by a multi-pronged effort, we will find
incremental benefits along the entire process improvement
continuum. The end result being more generic drugs coming,
being made available to the American people.
Senator Kohl. Of course, you understand the American people
want every generic drug that can be approved to be approved
because it is an immediate tremendous saving in their pocket,
right? And that is why we are here. That is a basic reason why
we are here.
I just make that comment, and I turn it back to you, Mr.
Chairman.
Senator Bennett. Yes. I mean, a 3-year backlog, and you add
in holidays, you get to 3.5.
Senator Kohl. Thank you again.
Dr. von Eschenbach. Well, I think----
Senator Bennett. That is more significant than I had
realized.
Dr. von Eschenbach. Well, I think one of the important
things I would like to also emphasize--and apologize if I
didn't make it as clear as I should have--is that in looking at
the large volume of generics and what is available to the
American people, we are looking at this in a hierarchical
fashion.
First and foremost, we want to be sure that across the
continuum of drugs that there is at least one generic available
for any one of those particular drugs or solutions. Then there
are follow-on generics after that or additional generics that
are complementary or perhaps identical to that same generic.
Now the entire portfolio will always continue to grow, but
there is a point where we believe that at least being sure that
there are available drugs, generic drugs for every condition
and in every situation and circumstance will be our first
priority.
Senator Bennett. So you are saying you are prioritizing
them so that the generic that would benefit the greatest number
of people will get moved up in the----
Dr. von Eschenbach. Exactly, sir. In order to put the
backlog into perspective, it would be one thing if we had a
backlog in which there was an innovator drug for which there
was no alternative generic. That would be a backlog that would
have a critical impact on the health and welfare of the
American people.
But if the backlog is one in which we already have three or
four generics available for that particular drug, and there is
a backlog of three or four other applications, that is going to
get less priority in the hierarchical system.
Senator Bennett. Well, I encourage you to continue to do
that, and that is prudent management. But it would be helpful
if the total number could come down and the total backlog could
shrink a little.
CRITICAL PATH TO PERSONALIZED MEDICINE
Let me focus for a minute on your new initiative called the
Critical Path to Personalized Medicine. That is an intriguing
title, and this is obviously a long-term investment on your
part.
Tell us what the ultimate goals are and how long you think
it will take to achieve those goals. Or is this something that
the goals will always be coming up, so this is a long-term
program that will continue?
Dr. von Eschenbach. Well, Mr. Chairman, I have benefitted
greatly from my previous experience in being able to witness
firsthand the tremendous progress that is being made in
biomedical research and the literal explosion in our ability to
understand diseases and even human health and nutrition from a
genetic and molecular perspective.
And that discovery is really opening up for us the
opportunity to develop new solutions, new products that are
very different and unlike the products and solutions that we
have seen in the past. We need a new bridge between that
discovery to the delivery of those new solutions to patients,
and that bridge of development is the bridge that the FDA is
responsible for and is nurturing.
And it is the critical path from that discovery to that
delivery that we are committed to by bringing to the regulatory
process the science that has been involved in the discovery and
the development of these new interventions and the science and
technology that will be necessary in order to regulate and
approve these new solutions and new products with regard to
their safety and their efficacy.
So, in that context, with regard to that vision of what we
are trying to accomplish, it will be an ongoing iterative
process. We will continue to develop it as the science and
technology continues to develop it.
But our goal is to make certain that these new solutions
that we are experiencing by virtue of our investment in
biomedical research at the NIH and in other areas will, in
fact, translate into solutions that can and will be delivered
rapidly, effectively, and safely to the American people.
Senator Bennett. Well, one of the frustrations that I have
had since I have been in the Senate is that almost none of the
discussion about health care has anything to do with health. It
is always focused on acute care or after the fact kind of care.
And if I hear correctly what you are saying, FDA is making
a commitment for keeping people healthy prior to the time when
they would need acute care and taking advantage of the science
that is being developed at NIH and elsewhere.
And if we are successful and keep people healthy at the
front end, we presumably save money at the back end. Is this a
fair summary of what it is you are aiming for?
Dr. von Eschenbach. It is an absolutely insightful summary,
and I appreciate you framing it in that way. We believe that
the opportunities that are now available to us, the
opportunities that the FDA can make possible for the American
people, and for the rest of the world, by virtue of this
critical path from discovery to delivery is the fact that
medicine will be more preemptive or preventive.
We will have the tools to be able to understand the
earliest stages in the development of many diseases and be able
to then have products that will be able to be delivered to
preempt that process. Being able to develop and regulate
approval of those products will require a new FDA, the FDA of
the 21st century.
And so, we will see cost benefits to that by moving out of
a model that is predominantly focused on the treatment of
established disease to a model in which we will have the
solutions and tools to detect diseases much earlier in their
development and then to be able to intervene and preempt them.
It will also be personalized. We are seeing increasingly
opportunities to be able to define the right intervention for
the right patient based on our understanding of these
fundamental molecular mechanisms. And we are seeing new
targeted drugs becoming available and coming to the FDA for
regulatory approval.
If we get the right drug to the right patient, we eliminate
the waste that occurs in the old system, the empiric system,
where we are giving patients an intervention based on a
statistical probability of success, but not knowing whether it
will work in that patient or another patient. Just the fact
that we can eliminate waste will have significant implications
for our total expenditures in health care.
Senator Bennett. I would like to pursue that with you in
some detail because I think, ultimately, that is the only
solution to our spiraling increase in Medicare and private
health care costs.
Dr. von Eschenbach. I would look forward to that, Senator.
Senator Bennett. Yes. Senator Kohl.
GENERIC DRUGS
Senator Kohl. Thank you very much.
Just to add a final word on generics, you stated that you
prioritized to be sure that we have at least a generic, if not
two, available for every brand-name drug. I would like to ask
my staff to work with your staff to satisfy me that, in fact,
we are doing a good enough job in meeting at least that minimum
kind of a condition which, as you point out, is very important,
and I would agree.
Dr. von Eschenbach. We would welcome that, Senator.
Senator Kohl. Thank you.
Dr. von Eschenbach. And look forward to working with your
staff.
AVIAN INFLUENZA
Senator Kohl. Dr. von Eschenbach, I was recently looking at
some news reports on avian flu, and these two reports seemed to
summarize, I think, what many people are feeling.
The first report quoted Dr. Gerberding of the CDC as saying
that our current situation is not a good one. Secretary
Johanns, on the other hand, was quoted that same day as stating
that bird flu is coming to America, but he said that we are
ready and ``know how to deal with it, and we will deal with
it.'' And just last week, he testified to us that, ``We are
well prepared for bird flu.''
It is understandable why many people are confused and
uncertain and concerned about how to react. So from your
perspective, are we prepared for a bird flu outbreak? How much
vaccine do we have on hand now? And please talk about our
ability to obtain or make more vaccine.
Dr. von Eschenbach. Well, Senator----
Senator Kohl. Do you think we are well prepared?
Dr. von Eschenbach. Pardon me, sir?
Senator Kohl. How would you summarize our situation with
respect to the possibility of a bird flu outbreak?
Dr. von Eschenbach. One of the things that I have
appreciated is the fact that, as Secretary Leavitt has
indicated, we are in a race. We are in a race with regard to
our ability to mobilize and prepare all of the particular
interventions and solutions that will be necessary to deal with
an avian flu outbreak in humans.
And that race to prepare is in contrast to the race that
the virus is engaged in with regard to its mutations. We don't
know and can't predict exactly how long it may take for the
virus to undergo the mutations that might be necessary for
human-to-human transmission. We certainly have seen enough with
regard to the virus to be alarmed and concerned that that
ultimately might occur.
Having witnessed the mobilization that is occurring with
regard to not only our own infrastructure within the United
States, but around the world, I believe that we are engaged now
in a very positive and very constructive and productive effort
to bring all of the components to bear. As I indicated, the FDA
is taking its role in a very integrated and comprehensive way
to look across this continuum, to accelerate the ability to
develop vaccines.
We cannot develop a vaccine for the human-to-human virus
until that virus occurs, but we are developing vaccines for the
H5N1 that has already occured. And we are also developing seed
strains so that we have in place variations of the virus so
that we would be already prepared to move to the next step to
mass production of vaccines once we got the right match.
So I use that as an example to point out that it is a
problem that requires a comprehensive, integrated,
collaborative solution. It is one in which we will look across
the wide portfolio of interventions, and it will go beyond just
vaccines to also include, as I have indicated before,
antivirals, and diagnostic devices.
Senator Kohl. But just last week, the United Nations stated
that bird flu could arrive in the United States between 6 and
12 months from now, which is imminent. So if these predictions
are correct, the virus could arrive in the United States before
we have the capability to make mass quantities of vaccines.
What advice do you have for people all across our country
who are concerned about this imminence, this possibility within
6 to 12 months?
Dr. von Eschenbach. Well, I think, as Secretary Leavitt has
indicated, we need to be aware of the threat. We need to not
panic, but we need to prepare in the sense of anticipating and
being aware of the fact that this is a threat that could strike
us.
It has not happened at this point in the sense of having
the avian form of the disease in the United States, but that is
expected to occur. It has not happened with regard to a strain
that has human-to-human transmission capabilities.
But I think as far as the public is concerned, the
continued support of the efforts that are being made across the
public health continuum--not only in the Department of Health
and Human Services, but throughout the rest of the academic
world and in conjunctions with WHO--as you pointed out, I think
it is a commitment to prepare and to prepare as rapidly as
possible is the most important contribution we could make at
this point.
Senator Kohl. Thank you, Mr. Chairman.
Senator Bennett. Senator Harkin.
BOVINE SPONGIFORM ENCEPHALOPATHY
Senator Harkin. Thank you very much, Mr. Chairman. And I
apologize for being late. We had an authorizing committee
hearing prior to this, not the appropriations.
But I thank you, Mr. Chairman, and welcome our witnesses
here, especially Dr. von Eschenbach, whom I have worked with a
great deal at NIH over the years.
I will get right to the point. Maybe this has been asked
before, but I don't know if anything has been brought up about
the recent case of BSE that was just discovered in Alabama.
Senator Bennett. It hasn't been asked. So go ahead.
Senator Harkin. Thanks, Mr. Chairman.
Well, as you know, it is in the press now that it was
confirmed that we have another animal, a 10-year-old cow in
Alabama tested positive for BSE, and now they are looking at
the herd and the feed and everything else to try to figure out
if there were other animals contaminated or where this
contamination may have come from.
Now FDA recently proposed several changes to the feed ban
rule that it first adopted in 1997. The main adjustment
proposed is that brain and spinal cord from cattle would be
banned from all animal feed, not just from cattle feed, okay?
So far, so good.
However, the loophole that currently exists of allowing
poultry litter--yes, you heard me right--poultry litter to be
fed to cattle would continue.
So we have a situation where you can take some of the SRMs,
specified risk material, from cattle, a ruminant animal, feed
it to chicken. Some of that gets into the litter. The litter is
then fed to a ruminant animal. The prions exist, and they may
exist in the SRMs from the slaughtered, go into chicken feed,
fall into the litter, and be fed back to a ruminant animal.
Canada is in the process of strengthening its feed ban rule
to prohibit all, all specified risk materials from all animal
feed, including pet food. That is, Canada is going beyond just
the brain and spinal column. Canada has already banned poultry
litter and plate waste from cattle feed.
Now FDA clearly acknowledges that the main cause of BSE in
cattle is from contaminated feed. In fact, the feed rules are
routinely cited by USDA and FDA officials as our first line of
defense against BSE. But in this case, FDA, with these new
proposed rules, appears to be preparing to come out with a
weaker feed rule than Canada, weaker than has been called for
by experts on BSE.
In other words, it would still be permissible to feed
cattle byproducts with a high risk of BSE back to cattle
through poultry litter. Now, again, I don't know what the
reasons for allowing that are, but I am just wondering with
this proposed rule, FDA proposed rule, FDA will only prohibit a
partial list of SRMs from all animal feed, a partial list.
In addition, FDA is not closing the loophole that currently
exists by allowing poultry litter to be fed to cattle. This
leaves a clear circle of transmission wide open, where the SRMs
that are not prohibited by the proposed rule could be fed to
poultry, and then the poultry litter fed back to cattle. How
does the FDA justify not closing the poultry litter loophole?
Dr. von Eschenbach. Senator, let me first begin by saying I
appreciate the question and thank you for it because it is
addressing an issue that, as you pointed out, with the recent
awareness in the press of another cow being detected with BSE,
it has raised concerns. And it is important that we address
them.
The feed ban that was put in place in 1997 was done in a
way to be able to ban high-risk materials and to be able to
over a period of time, continue to monitor and inspect and be
sure that processes were being appropriately applied. So FDA
has been working closely with USDA. As it has been responsible
for the issues with regard to cattle, FDA has been approaching
the issues with regard to animal feed.
Throughout that period of time, and as you have pointed
out, the processes that we put in place have, as we have gone
through looked for compliance with regard to the processes, we
have found in all the inspections over 99 percent compliance
with the rules. And during that period of time, over 800,000--
or at least at this point with regard to 650,000 high-risk
animals that the FDA has identified, there have only been 2
cases of BSE, and those 2 cases have been in animals that were
born before the feed ban was put in place.
Now I emphasize that because I think it is important to
point out that the processes that have been in place since 1997
have had a high degree of compliance, and in fact, the risk of
BSE in the cattle population at this point in time has only
involved 2 animals, and both those animals were born before
this ban was put in place.
Having said that, as you have pointed out, the FDA recently
went a step further to further strengthen the feed ban rule and
put in additional bans, as you have indicated.
Now with regard to the specifics of the transmission of BSE
in prions in the droppings from poultry, if I could permit--
with your permission--to have Steve Sundlof, the head of our
Center for Veterinary Medicine, who is responsible for this
area, he may be able to give you a much more precise scientific
answer with regard to the risk of that particular aspect of
possible transmission of BSE.
POULTRY LITTER AND BSE TRANSMISSION
Senator Harkin. It is up to the Chairman.
Senator Bennett. We could follow up.
Senator Harkin. It is up to the Chairman. Yes, that is
fine.
Senator Bennett. Do you want to follow up quickly?
Senator Harkin. If that would be okay with you, Mr.
Chairman?
Senator Bennett. Sure. Go ahead.
Mr. Sundlof. Thank you, Senator Harkin.
I am Steve Sundlof, the Director of the FDA Center for
Veterinary Medicine, and it is my center that regulates the
safety of all animal feeds, including pet foods.
To get to your precise question regarding poultry litter,
first of all, we have evaluated the potential risk of poultry
litter to spread BSE among cattle, and we find that to be very
low for a number of reasons. First of all, the amount of animal
protein in that poultry litter is very small. Secondly, it
comprises a small part of the cattle diet. Thirdly, when we put
it through some of our risk assessment models, it appears that
that risk presently, as the rule is written, represents an
extremely low risk.
By proposing that all brains and spinal cords from cattle
over the age of 30 months be eliminated from all animal feeds,
you have taken 90 percent of whatever remaining infectivity
there exists out there, and you have taken that out of any
poultry diet. So now with the new proposed rule, you have
actually reduced any potential risk from poultry litter by
another 90 percent.
And again, that is 90 percent of a very, very small risk to
begin with. And so, the proposal really addresses a lot of the
issues that remain around poultry litter.
Senator Harkin. Is it possible, Mr. Sundlof, is it possible
for the prions to come from a ruminant animal that actually
might be fed to poultry or drop in the litter, and that litter
could then possibly be fed back to a ruminant animal?
Mr. Sundlof. It is possible, but the amount that would be--
first of all, if you take the brain and spinal cord out, you
have eliminated 90 percent of whatever infectivity could go
into that.
Senator Harkin. I understand. I understand that.
Mr. Sundlof. But the amount of animal protein that is in
the litter is very, very small. Now, you know, we don't say, we
never can say that the risk is absolutely zero. And so, to
answer your question, yes, it is possible. But the probability
of that occurring is very, very remote.
Senator Harkin. Well, now, Canada has already banned
poultry litter, right, from being fed?
Mr. Sundlof. That is true.
Senator Harkin. That is true in Europe, too?
Mr. Sundlof. Yes.
Senator Harkin. It is true around the rest of the world as
far as I know. And my question, I guess you just raised this
question in my mind, if poultry litter is so low in protein,
why are they feeding it?
Senator Bennett. Yes, that was the question I have. If it
is so small, what does poultry litter bring to the table?
Mr. Sundlof. Well, a little cattle physiology here. Cattle
are able to convert non-protein materials like cellulose, in
terms of grass, actually into protein. So a large part of
cattle diet is made up of material that is very low in protein,
but in the rumen of the cattle, the microorganisms actually
make protein, which then the cattle digest.
So in terms of why Canada and Europe and other countries
don't feed poultry litter has to do more with the demographics.
In the South, especially in the southeastern United States,
cattle are raised on open land. They are raised in areas where
there is a lot of poultry production in addition to cattle
production.
Poultry litter becomes an issue. The poultry industry has
to get rid of this product somehow. They can either spread it
onto the land and use it for fertilizer. But in general, there
is more than can be disposed of by that method. It does have a
fairly high nutritional value for cattle. It is something that,
strangely enough, cattle seem to like to eat. And those
conditions really don't occur in other parts of this country
and especially in Canada and Europe.
Senator Harkin. Well, again, since everyone else has banned
it, it seems like we are always looking for ways to somehow get
around banning the elements, all SRMs, not just the high risk,
but all SRMS from getting back into ruminant feed. There are
ways we can do that. Other countries have done it.
BSE RULE AND HARMONIZATION WITH CANADA
Now I am told, Mr. Chairman, I am told that some FDA people
told my staff they were working with Canada to make its rules
similar to the United States. In other words, FDA is working,
hoping to see that Canada weakens it rule to match that of the
United States. Is that so? Are we working to try to get Canada
to weaken its rule?
Dr. von Eschenbach. We are exploring harmonization efforts
with Canada.
Senator Harkin. Now what does that mean?
Dr. von Eschenbach. Well, that means that we are exploring
whether or not, you know, this is a proposal----
Senator Harkin. Are we exploring to get to their level or
get them to our level?
Dr. von Eschenbach. Well, we are holding discussions where
we are looking at their assumptions behind their risk models
compared to our risk models. And if we find that their risk
models are a better reflection than what we have developed,
then we would be willing to adjust our rule.
But also we are just in the discussion phases now, where we
are sitting down and examining the assumptions that went into
each of our rules to determine whether or not those are valid
in our particular countries, and there may be. And in the case
with Canada, there may be some valid reasons why they should be
different.
Senator Harkin. Mr. Chairman, you have given me more than
enough time. I do have some follow-up questions on the next
round.
Senator Bennett. Surely. We will have another round.
Dr. von Eschenbach--and thank you, sir, for your expertise.
You told me more about chicken litter than I probably wanted to
know.
MEDICAL DEVICE USER FEES
One of the things that I have been interested in since I
have had this assignment in the Senate has been user fees and
particularly medical device user fees. I found that FDA was
delighted to have the extra money from the user fees, which
were being paid somewhat reluctantly on the part of the users,
but paid in an effort to increase the performance and lower the
backlog of approvals.
And there was a period when FDA simply took the money and
then took the appropriated money that would have gone into
improving performance and spent it someplace else. And I have
been a bit of a nag on that issue and got an agreement out of
OMB that that sort of thing would stop, that the user fees
would, in fact, be matched with appropriated funds, and the two
would be coupled rather than one becoming the replacement for
the other. It is only fair that that be the case.
Could you bring us up to date on where we are with
performance out of MDUFMA? Now I have a copy of the answer that
was given in the House with respect to this, and that is part
of the transcript now of the House hearing. And I find that
useful, but give you the opportunity to comment in general
terms as to where we are with respect to greater performance in
the medical device area and other areas where user fees are
being paid in an effort to make sure that things move more
rapidly.
Dr. von Eschenbach. Well, Senator, as I have come to
understand it and appreciate it, with regard to MDUFMA, or the
medical devices user fees, that particular program has not had
as long a history of experience and process improvement as has
PDUFA with regard to the experience at FDA. And obviously, with
medical devices, that introduces its own set of complexities
with regard to the review process.
Having said that, as MDUFMA has been implemented at the
FDA, in most cases, there has been a full compliance with
regard to the targets or the milestones that were put in place.
But at the same time, it is also true that it has not been the
case uniformly across the entire board and, in fact, in looking
at even where we have met those milestones, the incremental
improvement in terms of really being able to significantly
reduce cycle time and streamline and accelerate the time to
market is not to the degree that even we would be happy with
and comfortable with.
So we are looking at this from the point of view of process
improvement. We are looking at it and working collaboratively
and cooperatively with the industry in order to be able to
continue to find ways to accelerate the process and make it
more effective.
We think there are opportunities to work with the industry,
for example, with the preparation of their applications in a
way that will help us proactively and prospectively be able to
do that by greater consultations. We have noticed with regard
to PDUFA that that opportunity for consultations before the
application process has proven to be something highly
attractive and very positive with regard to their experience.
So we are looking at this. As you have pointed out, these
dollars will be focused and targeted for a specific purpose,
and that will remain so. And we will look to continue to
improve the process.
Senator Bennett. Thank you. I don't want user fees to
become general taxes that just go into the general fund and
then may or may not be producing the result for which people
are paying extra.
Senator Kohl.
FIELD INSPECTORS
Senator Kohl. Thank you, Mr. Chairman.
Dr. von Eschenbach, looking at your budget, it states that
your field force of inspectors is going to decrease by some 48
to 60 people. It also says in your budget in the very same
section that the number of FDA-regulated imported products
requiring inspection is increasing exponentially.
Some of the other examples of activities that won't be
performed as often by these inspectors, as I said, the analysis
of imported and also domestic samples of food, inspections of
veterinary feed manufacturers, inspections of human drug
manufacturers, compliance and recall functions, including food,
drugs, and animal drugs and feeds.
How do you justify cutting field inspectors right now when
the requirement for them seems to be going up and not down? Do
you really believe that this is the best place for you to be
trying to save money?
Dr. von Eschenbach. What we are attempting to do, Senator,
is to look at this again--as I have indicated in an answer to a
previous question--as a process improvement issue. In looking
at the total portfolio of activities and asking questions,
where can we streamline? Where can we make this more efficient
so that we are getting more outputs vis-a-vis the resources
that we have to utilize to do that, including the human
resources and the number of people that are involved?
We think that there are opportunities to continue to
improve the process. By, for example, focusing on preapproval
inspections, working with manufacturers, working with regard to
good manufacturing practice requirements, we can improve some
of the processes and opportunities with regard to a proactive
approach.
We are targeting inspections to areas of high risk so that
we are utilizing the workforce in a more efficient, more
targeted way so that we are focusing on the areas where we see
the highest concerns or the highest risks as opposed to simply
disseminating those resources with less impact.
So it is a process improvement problem. Looking at modern
technologies that will enable us to enhance the ability to
utilize the inspection process is another way we think we can
continuously get more outputs, meet our responsibilities, but
do that in a way that is efficient in the use of the human
resources that we have so that we are deploying those where we
see areas of higher public health need.
DRUG SAFETY OVERSIGHT BOARD
Senator Kohl. All right. Dr. von Eschenbach, your budget
talks about the creation last year of an independent Drug
Safety Oversight Board to oversee the management of important
drug safety issues.
A quote from Secretary Leavitt regarding this board says,
``The public has spoken. They want more oversight and more
openness. We will address their concerns by cultivating
openness and enhanced independence.'' That is his quote.
And yet the FDA has received criticism because the board
now has no public representatives, meets in private, and
publishes only vague summaries regarding what is discussed in
these meetings. So how do you respond to these criticisms?
The board may be independent, but is it really transparent
when the only members are from the FDA and other Government
agencies and reports are so vague?
Dr. von Eschenbach. Senator, this is an important area,
obviously, with regard to our commitment to drug safety. And
the Drug Safety Oversight Board, as you point out, does go
beyond FDA, and it does include other Federal employees from
the National Institutes of Health and from the Veterans
Administration.
That provides us a couple of opportunities. One, it does
broaden the input. It does enhance the expertise that is
involved in this oversight review, and it does take it outside
the walls of the FDA so that it is subject to a larger and
more, if you will, independent analysis and review by
individuals who are not part of the agency and not part of the
FDA internal process.
The very fact that they are Government employees, however,
provides a great deal of efficiency in the terms of which this
board is able to function. First of all, it enables us to avoid
some of the potential problems and barriers in timeliness that
would come from having to have to resolve conflict of interest
issues or problems should this be outside of the Government.
It allows us to deal with confidential proprietary
information within the confines and constraints of the
committee so that we are looking at data and information that
is much more sensitive and, therefore, has the potential to be
much more important and insightful with regard to the safety
issues.
So we believe that it is a balance and a balance between a
process that is framed within the rules and regulations of
FOIA, the rules and regulations with regard to conflict of
interest, while at the same time, it is broadening the input
beyond the FDA and assuring that we have the right expertise of
individuals who will be able to improve the oversight of these
drug safety issues.
OPENNESS OF DRUG SAFETY OVERSIGHT BOARD
Senator Kohl. Well, Secretary Leavitt said that he wants to
see more openness, more independence, and that he would take
steps to improve that. Now if you meet in private, if the
members are not public representatives, and if the reports that
emanate from your meetings are not specific, what kind of
openness is that?
Dr. von Eschenbach. Well, I think there can be a great deal
of attention paid to the openness and transparency of the
process and the rules and regulations that frame how an
oversight is being conducted. But the issues with regard to
what is occurring in the internal discussions dealing with
proprietary information, that in itself needs to continue to be
protected or we won't be able to get the right information that
we need to analyze and assess.
So I think it is a balance, and it is an interplay between
a process that is well defined, open, and, if you will, perhaps
more precisely is transparent in terms of how it is being
conducted with the rules that govern and frame how things are
being done.
But then the discussions occur within the context of the
confidentiality that is required in order to protect
proprietary interests and information that is not appropriate
to disclose in a public venue. And the committee has been
vigilant and active in its effort. There have been five
meetings in 2005 looking at 17 different products.
So it is active. It is engaged. It is an ongoing effort,
and I think it is a process of balance between making sure that
there is an additional layer of oversight, but one that is
still being conducted within the constraints and confines of
what the law and the regulatory process makes possible.
Senator Kohl. Thank you, Mr. Chairman.
Senator Bennett. Senator Harkin.
BOVINE SPONGIFORM ENCEPHALOPATHY
Senator Harkin. Thank you, Mr. Chairman. Just one last
follow-up on the BSE.
I understand that FDA is going with the weaker rule because
they are concerned about the costs of a stronger rule. Well, we
can't ignore cost, but consider the cost that our country is
bearing in lost export markets already because of that. Or
consider the potential cost if consumers lose confidence in
eating beef.
I mean, you can argue about science and risk, but some
things just make common sense. I mean, how many people know
that cattle are fed chicken litter? Now that is not just the
straw and the bedding, that is fecal matter. They are eating
chicken feces, okay? And they are eating a lot of stuff that
could fall into that litter that could be parts from SRMs that
are fed a lot to poultry, a lot.
And since other countries have banned it, I don't know why
we are so reluctant to do that. Ask anybody even in this
audience, how many, if you had a choice between hamburger from
a cow that never ate fecal matter or one that did, what do you
think you would get? It makes common sense.
And my big concern is that with this recent case of BSE,
obviously, I have an interest in this because I represent a lot
of cattle feeders. I represent cattle people, and they are
concerned about the loss of confidence that may happen if more
of these problems start popping up.
You may hear from the other side or some other side about
this. But it seems to me that a big part of the problem that we
have right now is that both FDA and USDA are telling the public
that the feed rules are a firewall, a true safeguard. But now
what I am hearing is you are saying that the feed rules are
based on probabilities, 90 percent here, 90 percent there. You
know, probabilities.
Well, so what we are hearing, the rhetoric and the facts
don't match. And I am just, again, concerned that we don't move
ahead more aggressively to prohibit all SRMs, not just the high
risk, all SRMs from all animal feed, including poultry, and to
eliminate, finally get over that hurdle of plate waste.
I can't believe we still permit plate waste in this country
going into ruminant animals. Most other countries don't, but we
still permit it. So, again, that is all I have to say on that.
FOOD AND NUTRITION FTE
A couple of other things, Dr. von Eschenbach. Is it true
that in this budget that there are somewhere between 50 and 80
FTEs that will be taken away or transferred out of the food
safety and nutrition area? Am I wrong in that?
Are there any at all in this budget, are there FTEs being
cut in food and nutrition?
Dr. von Eschenbach. With regard to the area of food and
nutrition, Senator, we are looking at redeploying activities
within that area and synergizing and partnering in order to be
able to meet the necessary commitments that we have within the
budget. But do that in a way that is more efficient and more
effective.
We are looking at opportunities, for example, where
mechanisms with regard to our management of personnel and
opportunities for early buyout will enable us to reduce the
cost of our workforce without necessarily reducing the number
of FTEs. I would have to----
Senator Harkin. Okay. Are there any in the budget? That is
all I want to know. In this budget before us, is there a
reduction in full-time equivalents in food and nutrition?
Dr. von Eschenbach. I will have to give you for the record
the specific----
Senator Harkin. Okay. If you don't know, then if you could
get back to us, I would sure appreciate it.
Dr. von Eschenbach [continuing]. FTE reductions. But as I
indicated to a prior question, I want to reassure the committee
that whatever reductions and whatever redeployments are made in
resources, we are doing that in a way that it has not
compromised the commitment to public health and to safety.
Senator Harkin. I appreciate that.
[The information follows:]
Food and Nutrition FTE
The strategic redeployment will be offsetting the requested
increases in fiscal year 2007 for critical, high priority initiatives
such as Pandemic Preparedness and Food Defense. This would be a change
in FTE levels of -64 for Center for Food Safety and Applied Nutrition
and -22 in Food related Field activities.
The redeployment of the FTE in Center for Food Safety and Applied
Nutrition will be made from programs such as food additives and food
contact substances, research, cosmetics, dietary supplements, outreach
and regulatory activities. The redeployment of the Food related Field
FTE will be made in areas such as the collection and analysis of
domestic and import food samples and in the management, supervision,
and coordination of personnel at multiple locations.
DIETARY HEALTH SUPPLEMENTS EDUCATION ACT
Good manufacturing practices. Senator Hatch, the other
Senator from Utah, and I 12 years ago joined forces. We got a
bill passed called DSHEA, the Dietary Supplement Health and
Education Act.
At that time, we put a provision in the law that mandates
that FDA is supposed to come with good manufacturing practices,
GMPs we called them. About every 2 years since that, we have
been told that FDA is going to come up with good manufacturing
practices, going to come up with the regulations. This
persisted in the 1990s. It has persisted since then.
Twelve years later, we still don't have good manufacturing
practices regulations. The industry is crying out for this. The
public needs it. It will tend to get some of the bad actors and
those that might be out there out of the business. It will set
up good standards. And here I am told again, ``very soon.''
Can you give us your personal assurance that you will work
with OMB to get the GMPs published, and can you give us any
definitive date?
Dr. von Eschenbach. Thank you, Senator. And we are, along
with you, committed to continuing to the full implementation of
DSHEA and meeting the requirements that have been involved in
that important law.
With regard to the dietary supplement GMP, as you have
indicated, it is at OMB. The staff of CFSAN have been working
directly with them with regard to addressing any particular
issues with regard to that GMP being finally issued.
I will continue to commit to you and ensure you that FDA
will do everything that is needed and required to work with OMB
to bring that about as rapidly as possible. I understand that
it is----
Senator Harkin. It is frustrating.
Dr. von Eschenbach [continuing]. Imminent. But----
Senator Harkin. It is frustrating. Dr. Crawford, when he
was before the help committee last year, said--he assured us
that the GMPs for dietary supplements will be published in the
Federal Register within months. Still hasn't happened.
Senator Bennett. Depends on your definition of ``months.''
Senator Harkin. Okay. Well, I suppose if you meant a lot of
months, yes.
Dr. von Eschenbach. I have looked into this, Senator, and I
can tell you that it is in process and in progress. I am led to
believe and understand that the issues are being and have been
addressed.
Senator Harkin. Can you give us any idea, can we see
something happening here in the next 30, 60, 90 days? Anything
at all that we can hold you accountable for?
Dr. von Eschenbach. Please hold me accountable for working
with the OMB in an effort to make this come forward as you have
requested.
Senator Harkin. I won't press the issue further.
I just have one last question. I will wait until my next
round. Thank you.
Senator Bennett. Thank you.
The experience of working with OMB is one that I have had,
and it was an administration 30 years ago or longer, I guess.
But I don't think OMB has changed that much, and it is very
difficult many times.
And I have been in the position of being a witness where I
know what I want to say, but OMB has told me what I can say. So
I think Dr. von Eschenbach's commitment is probably the only
one he can make under these circumstances.
UNIFIED FINANCIAL MANAGEMENT SYSTEM
Unified Financial Management System. This is a project
initiated in 2001 to integrate several financial management
systems across the department. I am assuming we are talking IT
here, all right?
Dr. von Eschenbach. Financial management, yes, sir.
Senator Bennett. Everyone has experience with IT programs
that start out with great hope and anticipation and then end up
being over budget and behind time. Originally, FDA's share of
the total project through fiscal 2007 was estimated at $36.5
million. This subcommittee has provided more than $50 million
over the last 5 years, and your budget requests an additional
$1.2 million.
These are not large sums, but it is my understanding that
annual costs for the system were supposed to level off and go
down after fiscal 2005. This has not been the case. Since 2004,
annual costs have gone up roughly 37 percent.
Can you give us any kind of light at the end of this tunnel
as to where we are going and what kind of progress we have been
making?
Dr. von Eschenbach. I would be happy to, Senator, and I
also, with your permission, will call Kathy Heuer, who is the
head of our Office of Finance and Management, to provide
additional details.
As I have understood and appreciated the process, FDA is
contributing its appropriate share to the larger HHS effort
with regard to the UFMS initiative, and it has, in fact,
undergone an activation period of time with activation costs
for contractor support, training, vendor support for new tools
and licenses, and a need to continue to stabilize the process
with regard to its utilization.
We are anticipating and expecting that those activation
costs will come to an end through the year 2007 and into early
2008, which will bring us then into a level of cost reductions
and cost savings, in fact, with regard to once we have
implemented the system fully.
So that is my expectation and anticipation of the process
and how it will unfold. Kathy, if you would add to that?
Ms. Heuer. Thank you, Senator.
UFMS will be the largest financial management system on the
civilian side of the Federal Government when fully implemented.
It is a way to consolidate financial management across Health
and Human Services, allowing for better integration of
information, comparability of information, and sounder
management decisions based on easier access to data.
The cost increase you reflected in terms of 2005, 2005 is
the year that we implemented UFMS. We went live in April 2005.
The original budget projections did not include operations and
maintenance projections. Those are about $3 million per year.
We have a consolidated operations and maintenance structure
with the department. So that is something that we have to pay
in addition. Those were not part of the original estimates in
terms of the budget.
The original estimate in terms of the budget was just the
project development, and that is why there is that increase, as
you mentioned, the 37 percent going up because that was not
included. Originally, it was just development. But now the
operations and maintenance is on top of that.
As Dr. von Eschenbach said, when UFMS is fully developed
into 2008, then the development costs will be eliminated, and
our ongoing costs will just be the operations and maintenance
costs.
Senator Bennett. Thank you. I wish you well.
Ms. Heuer. Thank you.
Senator Bennett. Senator Kohl.
Senator Kohl. Thank you, Mr. Chairman. I have finished my
questioning. I will defer to Senator Harkin.
Senator Bennett. Senator Harkin.
STRATEGIC REDEPLOYMENT
Senator Harkin. Mr. Chairman, just one last thing. And
again, Dr. von Eschenbach, you are going to get back to us on
these FTEs?
Dr. Von Eschenbach. Yes, sir.
Senator Harkin. The question I asked, I had information
that in the budget there is a cut in FTEs in food and
nutrition?
Dr. Von Eschenbach. Senator, I am looking forward to
presenting to the entire committee for the record a detailed
explanation----
Senator Harkin. Okay.
Dr. von Eschenbach [contining]. Of the redeployment
strategy across all of the centers and offices within FDA. So
that it will define what the programmatic shifts are in those
programs, along with what the FTE changes will be. And we will
give that to you not only with regard to CFSAN, but with regard
to the entire portfolio so that you will have that with regard
to answering your question.
GELATIN CAPSULES FOR DIETARY SUPPLEMENTS
Senator Harkin. Okay. My last question has to do with U.S.
companies that want to export dietary supplements with gelatin
capsules to Europe are first required to obtain a health
certificate from the Food and Drug Administration, required to
do so by the European Union.
Now I wrote you a letter about this on February 28. I don't
expect you to have replied. That is a short time ago. But I
wrote you a letter about this on February 28.
Now as I understand it, the EU requires U.S. companies to
get a health certificate from FDA's Center for Food Safety and
Nutrition. But according to the exporters that have talked to
me, the EU does not require these certificates for
pharmaceutical companies that are using the same gelatin
capsules to export pharmaceuticals. But if you have a dietary
supplement, same gelatin capsule, they require the FDA to give
a health certificate.
Well, I am told that the FDA does not issue such
certificates. I don't know if that is so or not, but do you
have any--I don't want to catch you flat-footed on this, but I
am told that FDA does not issue them. So they are kind of
caught.
The EU says they have got to have a health certificate, and
yet FDA says they don't issue those. So----
Dr. von Eschenbach. Senator, I cannot give you the specific
details in answer to that question. I would be happy to do that
for the record or have one of the FDA staff that would be
responsible for that respond.
Senator Harkin. Well, please have your staff, and you
personally, take a look at the letter I wrote you on February
28. My staff will give you a copy here. I understand how those
things go. But take a look at that because it is a big issue.
Because it is the same gelatin capsule that pharmaceutical
companies use. They order them from the same place, but the EU
has rules that say you can't without a health certificate.
So, they are sort of caught in a bind here. I need to find
out about that and what we can do to help them overcome this
trade barrier.
Dr. von Eschenbach. I will look into that for you, Senator.
Senator Harkin. I appreciate that very much.
Thank you, Mr. Chairman.
[The information follows:]
Health Certificates for Gelatin Capsules
FDA issues a certificate, sometimes called a health certificate,
for bulk gelatin for human consumption exported to the European Union,
also known as EU. In the certificate, FDA certifies compliance with
relevant U.S. standards, which have been recognized for this purpose as
equivalent to EU requirements for foods including dietary supplements.
The EU requires the certificate include affirmations from the
manufacturer and periodic state inspections confirming the gelatin is
produced in accordance with U.S. standards, the gelatin meets certain
criteria, and that raw materials are appropriately sourced.
The EU legislation separates requirements for foods and
requirements for pharmaceuticals. However, to date it is only the
United Kingdom, in its implementation of EU legislation, has stopped
shipment of gelatin capsules containing dietary supplements. It is our
understanding that our EU counterparts are trying to resolve the
situation since the gelatin used in human food is, in most cases,
identical to the gelatin used for pharmaceuticals.
ADDITIONAL COMMITTEE QUESTIONS
Senator Bennett. Thank you.
Dr. von Eschenbach, we appreciate your attention to all of
these questions and you and your staff's response to what our
concerns are.
Dr. von Eschenbach. Thank you, Mr. Chairman. And may I
express to you and to the committee our gratitude, as I
indicated at the very beginning, for your support.
I would also like to express personally, for however long I
have the privilege to serve in this role, that both myself and
the staff of the leadership of the FDA would look forward to an
ongoing conversation and relationship about many of the
important issues that you raise. Not simply at a time, for
example, when we are requesting a budget appropriation, but in
an ongoing basis.
We intend to be responsive and timely to requests that are
provided to us by mail, but I look forward to that opportunity
in person as well. And I know that that is reflected by the
talented and wonderful people who are sitting behind me, who
are the content experts that are at your disposal.
Thank you, sir.
[The following questions were not asked at the hearing, but
were submitted to the Department for response subsequent to the
hearing:]
Questions Submitted by Senator Robert F. Bennett
MEDICAL DEVICE USER FEE AND MODERNIZATION ACT (MDUFMA)
Question. Please provide, for the record, specific information
regarding FDA performance in each of the medical device user fee goal
areas.
Answer. Secretary Thompson's November 2002 letter to Congress, also
known as the FDA commitment letter, defines the performance objectives
FDA is pursuing under the Medical Device User Fee Act, or MDUFMA. The
commitment letter defines a comprehensive set of challenging goals and
a schedule for meeting the goals.
To allow FDA time to build its capacity to meet the ultimate goals
set by MDUFMA for fiscal year 2007, the commitment letter provides for
a phased implementation of goals, with the addition of more goals and
higher performance expectations each year. In fiscal year 2005, 18
additional goals went into effect, with two exclusively for the Center
for Biologics, Evaluation and Research, also known as CBER. Six
additional goals go into effect in fiscal year 2006. In fiscal year
2007, FDA will be responsible for a total of 77 quantitative goals
covering five receipt cohorts. FDA is expected to pursue eight
additional nonquantifiable commitments, such as developing an
appropriate bundling policy, continuing our efforts to develop
mechanisms for the electronic receipt and review of applications, and
improving the scheduling and timeliness of preapproval inspections.
Although we do not expect to meet every goal specified by MDUFMA,
the trends are promising. Since some goals involve so few applications
that missing the review time frame for a single application by a single
day can result in ``failure'' to meet a MDUFMA goal. We are, in
general, showing better performance as we implement new policies and
procedures designed to improve the timeliness of our review processes.
Although it is too soon to know what our final performance statistics
will show, since many goals still have applications that remain open,
our performance on applications within more recent receipt cohorts is
better than our performance within older cohorts. If you had taken a
snapshot of performance for the fiscal year 2003, fiscal year 2004, and
fiscal year 2005 receipt cohorts on December 31, 2005, you would see
that FDA is meeting or exceeding 19 of the 24 goals in effect, and is
not meeting only two goals. No applications have qualified for the
remaining three goals.
We are confident that MDUFMA is producing positive results for FDA,
for industry, and--of critical and highest importance--for patients and
health care professionals.
I would be happy to provide FDA's performance report for fiscal
year 2004 for the record. We will forward our fiscal year 2005 report
when it is complete.
[The information follows:]
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
MEDICAL DEVICE USER FEES
Question. During operation of the medical device user fee program,
has the agency been able to determine specific direct and indirect
costs of performing the various types of PMA and 510(k) device
approvals? Will FDA be able to determine incremental direct and
indirect costs that will be associated with improving review times
under more aggressive performance goals in the future?
Answer. FDA is engaging with industry and stakeholders as we work
on the MDUFMA reauthorization. If the MDUFMA reauthorization results in
changes to the performance goals, we will be able to estimate direct
and indirect costs. During fiscal year 2005, FDA contracted with Dr.
Dale R. Geiger, a recognized expert in the field of government cost
accounting, to prepare a report of the costs of FDA medical device
review processes. The statement of work for this report did not require
Dr. Geiger to make findings and conclusions. Rather, Dr. Geiger
prepared analysis for FDA to consider during the MDUFMA
reauthorization. Dr. Geiger examined FDA medical device reviews
conducted during fiscal year 2003 and fiscal year 2004, including
investigational device exemption applications, investigational new drug
applications, premarket approval applications, or PMAs, PMA
supplements, biologics licensing applications, or BLAs, BLA
supplements, and 510(k) premarket notifications.
The methodology employed by Dr. Geiger follows generally accepted
accounting principles for U.S. Government reporting entities, and
parallels the methodology applied by an earlier Arthur Anderson study
that measured PDUFA costs for 1992 and 1993. Dr. Geiger examined both
direct and indirect costs, at CBER, CDRH, the Office of Regulatory
Affairs, or field, and FDA general and administrative costs. This work
will assist FDA with cost analysis in regards to the performance goals
resulting from the MDUFMA reauthorization.
Question. What criteria does the agency use to determine the
allocation and priority for distribution of staff increases across FDA
components, including offices, divisions, branches, regions, and
districts resulting from medical device user fees and related
Congressional appropriations?
Answer. In the absence of a Congressional directive, FDA allocates
medical device user fees and other medical device appropriations to
best achieve FDA's public health objectives, the performance goals, and
other expectations established under the Medical Device User Fee and
Modernization Act of 2002 and its amendments. Resources have been
allocated to reflect the workload balance between the Center for
Devices and Radiological Health, or CDRH, and the Center for Biologics
Evaluation and Research, or CBER. Soon after MDUFMA was enacted, FDA
estimated that 83 percent of the device review work was performed in
CDRH and 17 percent was performed in CBER. The Field resources
associated with each Center are included in these percentages. FDA's
fiscal year 2003 to fiscal year 2005 allocations were based on these
percentages. FDA is presently reexamining this allocation and expects
this examination will result in a higher percentage of MDUFMA being
allocated to CDRH.
Field resources are allocated among districts by the Office of
Regulatory Affairs, or ORA, according to each district's projected
medical device workload. To illustrate the use of workload to determine
distribution of resources, CDRH's MDUFMA hiring priorities were
established by product group experts who made recommendations about the
type and order of new hires that would best contribute to improving the
device review process. For example, the CDRH cardiovascular group,
which included experts on those types of devices from across the
Center, concluded that their highest priority for improving and
speeding the review of cardiovascular devices were additional
statisticians. Other product review teams--for example, those for in
vitro diagnostic devices, ophthalmic and ENT devices, ob-gyn, gastro-
renal, and urological devices--identified the priority needs they
believed were essential to improving the quality and timeliness of the
review process.
POSTMARKET SAFETY ISSUES
Question. At the industry-agency workshop on ongoing efforts to
improve post-market safety activities in February of this year, several
issues came up that are of potential concern.
With regard to the notion of requiring ``unique product
identifiers,'' how would this requirement differ from and improve on
the existing device tracking requirements for high risk devices? What
technical and labeling issues arise with regard to such a requirement
for all devices?
Answer. The device tracking requirement applies to manufacturers of
a small set of mostly implantable devices, and intends to ensure that
manufacturers can quickly locate defective devices and notify patients.
Conversely, the idea underlying unique device identification, or UDI,
is to require manufacturers to apply a unique code to the label of a
variety of medical devices, in both human and machine readable formats,
like barcodes. When combined with other health information technology
efforts, UDI has the potential to provide a number of benefits to
improve patient safety. Important potential benefits include the
reduction of device-related medical errors through the recognition of
compatibility and interoperability issues; facilitating the population
of device information in patients' electronic health records; and
improving the accuracy of information about marketed devices through
the standardized identification of specific devices in adverse event
reports. Additionally, an effective system of device identification
should allow more efficient recall of defective devices and also assist
in fighting counterfeit devices.
The type of information included in the UDI will determine what
technical and labeling issues arise. FDA is currently considering the
appropriate scope of such information and intends to address these
issues in a rulemaking.
Question. With regard to the draft guidance document on
requirements for additional information to be to be included in annual
reports, does FDA already have this information in various formats and
disparate offices throughout the device center? Would it make more
sense for the agency to break down its internal barriers that prevent
effective utilization of information already collected by the Center
for Devices and Radiological Health?
Answer. The Center for Devices and Radiological Health, also known
as CDRH, believes that data and information gathered in the postmarket
setting is critical to our continued confidence in the safety and
effectiveness of marketed devices. Premarket Approval, or PMA, annual
reports are one of the important tools that FDA relies upon to gather
information about the device once it is marketed. For this reason, CDRH
is assessing the information provided in annual reports to ensure that
these submissions provide meaningful information for the agency and
industry to assure postmarket safety. At this time, CDRH has not made a
final decision as to the type of information that should be included in
a PMA annual report. Once the decision is made, CDRH will take the
necessary steps to ensure that the information required in the annual
report is not duplicative of other regulatory reporting requirements.
CDRH is also reviewing our internal processes and systems for
communicating post-market information across the center. As part of its
on-going effort to improve all aspects of post-market safety, CDRH
initiated the Postmarket Transformation Leadership Team that consists
of CDRH managers and external experts to guide the Center in this
effort.
CRITICAL PATH INITIATIVE
Question. FDA is requesting an increase of $5.9 million for the
Critical Path Initiative. This funding is specified for the Center for
Drug Evaluation and Research. However, I understand that the Critical
Path Initiative is intended to speed the development of all medical
products regulated by FDA.
Will the requested funding be made available to other FDA Centers?
If so, how much will be made available to each FDA center?
Answer. All FDA centers will participate in Critical Path
activities in order to achieve the public health benefits envisioned by
FDA in its Critical Path report of March 16, 2004, and the Critical
Path Opportunities List announced on March 16, 2006. In fact, several
of the projects described in our budget request are cross-center
projects, such as work to create a library of digital
electrocardiograms, also known as ECGs, that involves both the Center
for Drug Evaluation Research and the Center for Devices and
Radiological Health.
The Agency is still working with our partners in government,
academia, and industry to determine which Critical Path activities, in
addition to those identified in our fiscal year 2007 budget request,
are the most appropriate activities to fund in fiscal year 2007.
I would be happy to provide for the record the Critical Path
Opportunities List that was announced on March 16, 2006.
[The information follows:]
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
REUSE OF SINGLE-USE DEVICES
Question. Last summer, Congress passed the Medical Device User Fee
Stabilization Act to continue the medical device user fee program,
adjust user fees, and tighten up branding provisions related to
reprocessed devices.
How soon will FDA issue the final guidance related to reprocessed
devices?
Answer. We hope to issue the final guidance shortly.
Question. Will the final guidance differ significantly from the
current draft?
Answer. Because the guidance has not yet been finalized and
cleared, we cannot say whether or not it will differ significantly from
the current draft.
Question. Will the final guidance assure that reprocessed single-
use devices are adequately marketed so reports of malfunctions and
serious injuries are reported correctly during the entire time a
particular device is being reprocessed or reused?
Answer. Yes. FDA believes that the final guidance will be adequate
to ensure that reprocessed single-use devices are adequately marked to
ensure that reports of malfunctions and serious injuries are reported
correctly during the time a reprocessed device is used.
Question. Will the FDA ensure that the labels that meet the
branding requirements actually make it in to the patient chart when
used by a hospital?
Answer. FDA's primary task will be to ensure and monitor that
reprocessed single use devices include the appropriate identification
and labeling. The hospitals and other facilities that use these devices
will have responsibility for ensuring that health care personnel attach
labels to patient charts as appropriate. FDA intends to work with
manufacturers, hospitals, and the Joint Commission for the
Accreditation of Health Organizations to do outreach and encourage
health care facilities to establish procedures to ensure that these
labels are properly attached to patient charts.
Question. Recent media attention to the reprocessing of single use
devices has raised many concerns about the practice. The original
Medical Device User Fee and Modernization Act required the FDA to
review the most commonly reprocessed devices. The FDA reviewed a small
subset of reprocessed single use devices and nearly 50 percent of the
reviewed devices were either withdrawn or were declared not-
substantially-equivalent.
What is FDA doing to ensure patient safety is not compromised by
the use of reprocessed single use devices? Can FDA do more to ensure
patient safety is not compromised by the use of these reprocessed
single use devices?
Answer. FDA implemented the new premarket requirements put into
place by the Medical Device User Fee Act, or MDUFMA, for reprocessed
single-use devices, also known as SUDs. Manufacturers who intend to
reprocess certain types of SUDs must now submit premarket 510(k)
notifications for these devices which contain validation data on
cleaning, sterilization and functionality. The additional premarket
requirements apply to reprocessed SUDs determined to be high risk for
transmission of infection or inadequate function following
reprocessing, involving those reprocessed SUDs intended to come into
contact with tissue at high risk of being infected with the causative
agents of brain-wasting Creutzfeldt-Jakob disease. The reprocessed SUDs
that are subject to the additional premarket requirements noted include
21 device types that were previously exempt from premarket notification
requirements, and 52 device types that were already subject to 510(k)
premarket notification requirements, but were not previously required
to submit validation data.
FDA's postmarket oversight of reprocessors of SUDs includes
inspections of manufacturing operations and review of adverse event
reports. Since August 2000, FDA has inspected 29 reprocessing companies
and over 200 hospitals to ensure that the third party reprocessors are
following quality system regulations and that any hospitals engaged in
reprocessing are also in compliance with these manufacturing
requirements. During that time period, FDA issued eight warning letters
to third party reprocessors and obtained two injunctions against firms.
FDA issued regulatory correspondence outlining violations to four
hospitals but has found that most hospitals are no longer reprocessing
SUDs. In fiscal year 2005, FDA inspected seven reprocessing companies
and found all of them in substantial compliance with applicable
regulations.
FDA continues to review adverse events submitted by manufactures,
user facilities and the general public for problems associated with
reprocessing of single use medical devices. FDA changed its MedWatch
reporting forms to make it easier for device users to inform the agency
when a reprocessed SUD is associated with an adverse event. In
addition, FDA recently issued draft guidance to implement the provision
of the Medical Device User Fee Stabilization Act, or MDUFSA, that
requires reprocessors to ensure that each SUD clearly identifies the
reprocessor. The new provision, which will go into effect in August
2006, is intended to facilitate accurate reporting of adverse events
involving reprocessed SUDs.
FDA believes the measures Congress put into place for reprocessed
single use devices under MDUFMA establish appropriate controls to
provide reasonable assurance of safety and effectiveness for these
devices. The controls, which include additional data requirements,
premarket review, and labeling provisions, have supplemented the
inspection and enforcement authorities FDA already had in place.
FDA DETAILEES
Question. Please provide information on the FDA detailees sent to
work in the Congress over the past 10 years, including the office they
work in at FDA, the office they were or are detailed to in the
Congress, the length of service, and FDA's policy on providing
detailees to the Congress.
Answer. I would be happy to provide that and the HHS Instruction
300-3, Detail of Employees for the record.
[The information follows:]
FDA DETAILEES
----------------------------------------------------------------------------------------------------------------
Name FDA offices Detail location Length of detail
----------------------------------------------------------------------------------------------------------------
David Dorsey, J.D.................... Office of the Senate Health, Jan. 2001-Present
Commissioner; Office Education, Labor, and
of the Chief Counsel. Pensions Committee.
Dr. Brian Harvey..................... Center for Drug White House, American Oct. 2000-Oct. 2001
Evaluation and Political Science
Research Office of New Association
Drugs. Congressional
Fellowship.
Stacy M. McBride..................... Office of the Senate Appropriations April 2005-Nov. 2005
Commissioner; Office Subcommittee.
of Management.
Dr. Kevin Mulry...................... Center for Devices and Office of Senator Jan. 1998-Aug. 1998
Radiological Health; Richard Durbin Office
Office of Device of Legislative Affairs.
Evaluation.
Thomas B. O'Brien.................... Office of the House Appropriations Feb. 2004-Nov. 2004
Commissioner; Office Committee. Jan. 2005-Feb. 2006
of Management; Office
of Financial
Management.
Dr. Donna-Bea Tillman................ Center for Devices and Congresswoman Louise Jan. 2000-July 2000
Radiological Health; Slaughter-New York.
Office of Device
Evaluation.
Lisa Siegel.......................... Office of the House Agriculture Feb. 1999-Oct. 1999
Commissioner; Division Appropriations
of Budget Formulation Subcommittee.
and Presentation.
Maureen Holohan...................... Office of the House Agriculture Feb. 2000-Oct. 2000
Commissioner; Office Appropriations
of Planning. Subcommittee.
Margaret Carlson..................... Center for Food Safety Senate Health, Mar. 2002-Jan. 2004
and Applied Nutrition. Education, Labor, and
Pensions Committee.
Dennis Strickland.................... Center for Biologics Office of Senator Jan. 1996-Dec. 1996
Evaluation and William Frist
Research; Office of (Brookings Legislative
Communication, Fellows Program).
Training and
Manufacturers
Assistance.
Tracy Summers........................ Center for Food Safety Office of Senator Aug. 1999-Nov. 1999
and Applied Nutrition; Edward Kennedy FDA
Office of the Director. Desk.
Diane Prince......................... Office of the House Energy and May 1998-Jul. 1998
Commissioner; Office Commerce Subcommittee.
of Legislative Affairs.
Jeff Shuren.......................... Office of the Senate HELP Committee Nov. 1999-Nov. 2000
Commissioner; Office Office of Senator
of Policy. Edward Kennedy's
Office.
Theresa Mullin....................... Office of the Office of Senator Byron Mar. 2000-Aug. 2000
Commissioner; Office Dorgan.
of Planning.
Dave Doleski......................... Center for Biologics Office of Senator Paul Jun. 1999-Dec. 1999
Evaluation and Wellstone (Brookings
Research; Legislative Fellows
Manufacturers Branch Program).
II.
Serina Vandegrift.................... Office of the Senate Agriculture Jan. 2004-Jan. 2005
Commissioner; Office Committee (Chairman
of Policy. Cochran).
Tim Lynagh........................... Office of the Office of Congressman 2003
Commissioner; Office Chris Smith.
of Legislation.
Mike Skonieczny...................... Office of the Office of Congresswoman 2001
Commissioner; Office Rosa DeLauro.
of Legislation.
----------------------------------------------------------------------------------------------------------------
HHS TRANSMITTAL 96.2
PERSONNEL MANUAL
Issue Date: 2/22/96
Material Transmitted.--HHS Instruction 300-3, Detail of Employees
(pages 1-3)
Material Superseded.--HHS Instruction 300-3 (all).
Background.--This Instruction has been substantially streamlined in
accordance with National Performance Review recommendations, and in
support of HHS administrative initiatives calling for more streamlined
rules and greater delegations of authority.
Any reference to ``OPDIV'' in this Instruction now includes the PHS
agencies, the Office of the Secretary, the Program Support Center,
HCFA, ACF, and AOA.
This issuance is effective immediately. Implementation under this
issuance must be carried out in accordance with applicable laws,
regulations, and bargaining agreements.
Filing Instructions.--Remove superseded material and file new
material. Post receipt of this transmittal to the HHS Check List of
Transmittals and file this transmittal in sequential order after the
check list.
John J. Callahan,
Assistant Secretary for Management and Budget.
INSTRUCTION 300-3
DISTRIBUTION: MS (PERS): HRFC-001
HHS PERSONNEL INSTRUCTION 300-3
DELEGATION OF AUTHORITY TO DETAIL EMPLOYEES
A. Authority Delegated
1. Heads of Operating Divisions (including PHS agencies and the
Program Support Center), the Assistant Secretary for Management and
Budget for the Office of the Secretary (OS), and the Inspector General
(for OIG) are delegated the authority to:
a. detail and extend details of civil service personnel within the
Department in increments not to exceed 120 days, pursuant to 5
U.S.C. 3341; and
b. detail and extend details of civil service personnel to or from
other Federal organizations on either a reimbursable or a non-
reimbursable basis pursuant to 31 U.S.C. 1535.
2. These authorities may be redelegate with further redelegation
authorized.
B. Restrictions
1. The term ``Federal organizations'' in paragraph A.1.b. above
does not include the Executive Office of the President and the
Legislative and Judicial Branches of Government.
2. The Assistant Secretary for Management and Budget retains the
authority to approve all details to or from the Executive Office of the
President and to or from the Legislative and Judicial Branches of
Government (including the General Accounting Office, the Library of
Congress, and the Government Printing Office).
C. Exclusions
1. This delegation does not cover:
a. Assignments of excepted employees other than those with Schedule
A and B or VRA appointments to competitive service position (5 CFR
6.5);
b. Details of Administrative Law Judges (5 U.S.C. 3344);
c. Details to certain Executive positions (5 U.S.C. 3344-3349) ;
d. Details of members of the Senior Executive Service (5 CFR
317.903) ;
e. Details of PHS Commissioned Officers (42 U.S.C. 215):
f. Details between HHS and a non-Federal organization under Section
214 of the PHS Act, as amended;
g. Details under the Intergovernmental Personnel Act of 1970 (5
U.S.C. 3372-3374; and 5 CFR Part 334); and
h. Details to an International organization (5 U.S.C. 3343; and 5
CFR 352.304).
D. Information and Guidance
1. The authorities delegated in paragraphs A.1.a and b. above must
be exercised in accordance with the requirements and/or provisions in
the following references:
a. U.S.C. 112 (Details to the Executive Office of the President)
b. U.S.C. 3341 (Details within Executive or Military Departments)
c. Civil Service Rule 5 CFR 6.5 (Assignment of Excepted Employees)
d. 31 U.S.C. 1301 (Appropriation Restrictions on Assignment of
Employees)
e. 31 U.S.C. 1535 (Assignment of Employees Between Executive Branch
Departments and Agencies and Written Agreements Between Agencies
Detailing Employees)
f. 4 CG 848-849, April 13, 1925 (Appropriations and Transfer)
g. 21 CG 954, April 27, 1942 (Details to the Legislative Branch)
h. 21 CG 1055, May 26, 1942 (Details to the Legislative Branch)
i. 64 CG 370, B-211373, March 20, 1985 (Nonreimbursable Details)
E. Prior Delegations
This delegation supersedes the February 19, 1991, Delegation of
Authority to Detail Personnel, as amended September 29, 1993, from the
Assistant Secretary for Personnel Administration to the Heads of
Operating Divisions and Regional Directors. To the extent that previous
redelegations of the authority to detail personnel made to other
officials within HHS are consistent with the provisions of this
delegation, they may remain in effect until new redelegations are made
under the authority of this delegation.
F. Effective Date
This delegation is effective on the date of this transmittal.
BSE--FEED BAN
Question. Yesterday afternoon, USDA announced that the third cow in
United States history tested positive for BSE, commonly known as mad
cow disease.
The FDA feed-ban rule, issued in 1997, is the first line of defense
in preventing BSE infection in U.S. cattle.
What is FDA doing to ensure that it is inspecting all entities that
are subject to the feed ban?
Answer. FDA inspects a wide variety of firms in the animal feed
industry to confirm compliance with the ruminant feed ban regulation.
Every firm that manufactures, processes, blends, transports, or
distributes animal feed or feed ingredients for any animal species is
subject to inspection under the FDA ruminant feed ban compliance
program. Firms are subject to inspection under the FDA ruminant feed
ban regardless of whether prohibited material is used or the relative
risk the firms practices may pose to the U.S. BSE feed control program.
In addition to feed manufacturers and distributors, over one million
farm operations feeding ruminants such as dairy and beef cattle are
subject to the rule.
The BSE Ruminant Feed Inspection Compliance Program guidance
document constitutes the FDA risk-based inspection priority approach
used by FDA and state investigators. FDA gives highest priority to
inspecting firms that manufacture or process animal feeds or feed
ingredients that contain prohibited material. This industry segment of
renderers, protein blenders, and feed mills are inspected annually to
ensure that ruminant feeds do not contain prohibited materials.
FDA also conducts inspections on firms considered to have a reduced
risk producing or causing contamination of ruminant feed. The agency
conducts inspections of these lower risk firms to detect overall
compliance trends. If FDA detects compliance trends, agency staff
implements more targeted inspectional initiatives to increase our
presence in some of these lower risk industry segments.
PANDEMIC INFLUENZA
Question. How is FDA using the $20 million for pandemic influenza
provided in the fiscal year 2006 supplemental?
Answer. The $20 million supplemental was received at the end of the
first quarter and the funds were available on January 26, 2006. I would
be happy to provide the spending plan for the record.
[The information follows:]
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
Question. How does FDA plan to use the $30.5 million requested in
fiscal year 2007?
Answer. I would be happy to provide that information for the
record.
[The information follows:]
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
IMPORT INSPECTION
Question. FDA plays a significant role in import inspection at
ports. For example, FDA inspects food, human drugs, animal feeds, and
medical devices at ports of entry across the country.
For FDA-regulated food products, FDA estimates that by 2007 the
amount that comes across the border will have nearly quadrupled since
1999. In a typical year, FDA physically examines less than 1 percent of
these food imports. How does FDA keep up with the ever increasing
amount of imported products?
Answer. FDA attempts to keep up with the increasing volume of
imported products by using a risk based approach when selecting
shipments to inspect and sample. All products are screened
electronically by FDA's Operational and Administrative System for
Import Support, also known as OASIS, against a set of criteria
established as a result of previous laboratory findings, foreign
inspections, information received from other regulatory agencies, and
the relative risks posed by the products in question.
The Public Health Security and Bioterrorism Preparedness and
Response Act of 2002 requires anyone intending to import or offer for
import a food product must provide prior notice to the FDA before the
shipment arrives at the border. Every Prior Notice submission is
screened electronically. If specific criteria are met, FDA's Prior
Notice Center will review those submissions using various intelligence
targeting parameters to protect the Nation's food supply against
terrorist acts and other public health emergencies. For example,
currently, working with information submitted through Customs and
Border Protection's electronic systems used for import entries or
through FDA's internet-based Prior Notice System Interface, FDA screens
shipments electronically before they arrive in the United States to
determine if the shipments meets identified criteria for physical
examination or sampling and analysis or warrants other review by FDA
personnel. This electronic screening allows FDA to better determine how
to deploy our limited physical inspection resources at the border on
what appear to be higher-risk food shipments while allowing lower-risk
shipments to be processed in accordance with traditional import
procedures after the electronic screening.
Question. Does FDA have adequate resources to properly inspect
imports?
Answer. The rapid growth of imports combined with ever present
security concerns has increased the need to assess the status of
imported products. FDA estimates it will review more than 19 million
import lines for admissibility into domestic commerce in fiscal year
2007. To help ensure the safety of imported products entering the
United States, FDA electronically screens imports through the
Operational and Administrative System for Import Support, also known as
OASIS. OASIS is an automated system for processing and making
admissibility determinations for FDA regulated products that are
offered for import. FDA also performs laboratory analysis on products
offered for import into the United States; conducts foreign inspections
to evaluate manufacturing conditions of products before they are
offered for import; and performs periodic filer evaluations to ensure
that the import data being provided to FDA is accurate.
The Prior Notice Center, also known as PNC, is another important
part of FDA's import strategy. The mission of FDA's PNC is to identify
imported food and feed products that may be intentionally contaminated
with biological, chemical or radiological agents, or which may pose
significant health risks to the American public, and intercept them
before they enter the United States. FDA will continue to focus
resources on Intensive Prior Notice Import Security Reviews of products
that pose the highest potential bioterrorism risks. The PNC uses a
combination of adaptable targeting strategies and weighted risk
indicators in the threat assessment process including contemporary
intelligence involving terrorist activities, a history of prior notice
violations, and compliance with admissibility standards as indicated by
the results of import field exams, filer evaluations, firm inspections,
repeated prior notice violations, and feedback from Field
Investigators. By using a risk based approach, the PNC can intercept
potentially hazardous products before they enter the United States.
The benefit of these reviews comes from the quality and targeting
of review activities; not from the volume of imports inspected. Thus
the quality of import screening is a better measure of FDA's import
strategy rather than simply focusing on the items physically examined.
DRUG SAFETY
Question. Drug safety is a topic that has been very much in the
news over the past year, and in your written testimony, you discuss the
challenges the agency faces in balancing the need for proper risk
analysis while trying to speed the review process.
This subcommittee has closely followed FDA's drug safety
activities. Last year, we provided an increase of $10 million for drug
safety. This amount was $5 million more than the budget request. In
fiscal year 2007, FDA is requesting an additional $3.9 million for drug
safety.
How is FDA using the $10 million increase we provided last year?
Answer. In its fiscal year 2006 budget submission to Congress, FDA
requested a base increase of $5 million to bolster the drug safety
functions performed within the Center for Drug Evaluation and
Research's Office of Drug Safety, also known as ODS. These included
three important increases. First, ODS will increase the professional
staff in ODS who manage and lead safety reviews. Second, ODS will
increase the number of staff with expertise in critical areas, such as
risk management, risk communication, and epidemiology. Third, ODS will
expand our information technology infrastructure for monitoring post-
marketing data by increasing access to a wide range of clinical,
pharmacy, and administrative databases. Valuable information regarding
the safety of drug products is available in these types of databases
for use by our scientists in ODS.
The approval by Congress of the Administration's fiscal year 2006
request for a $5 million increase significantly strengthens the ability
to conduct drug safety activities within ODS.
Congress increased our $5 million request to $10 million, adding to
our original request an additional $5 million for general drug safety
program activities. The Center for Drug Evaluation and Research will
use these funds to increase its emphasis on effective risk
communication. The additional funds will further enable FDA to
modernize its drug safety program and expand the understanding of,
involvement in, and access to, external population-based and ``linked''
databases, such as the CMS Medicare and Medicaid databases. Accessing
these databases represent the future of more thorough and continued
monitoring of drug products after they are marketed. Information
obtained from these databases, combined with voluntarily reported
adverse event information, will substantially increase the agency's
ability to efficiently and effectively identify, investigate, and
notify consumers of possible drug safety concerns and take appropriate
regulatory actions. FDA will also continue its efforts to improve the
Adverse Event Reporting System, also knows as AERS, so the agency can
more efficiently review medication error reports and more quickly take
appropriate action to avert further medication errors.
These funds will also allow FDA to hire additional expert staff
across the Center to enhance the ability to use multidisciplinary,
multi-office teams to analyze and interpret drug safety data before and
after product approval. FDA plans to hire additional scientists to
address its highest priority safety needs, such as responding to
emerging drug safety issues, supporting FDA's Drug Safety Oversight
Board, and increasing resources devoted to risk assessment and
communication activities. These funds will also assist Center efforts
to ensure that drug safety information is available to healthcare
professionals, patients, and other consumers.
Question. What will the additional $3.9 million allow FDA to
accomplish in fiscal year 2007?
Answer. FDA requested additional funds in fiscal year 2007 to
continue to modernize its AERS system and create ``AERS II''--a
replacement web-accessible computer system that will enable FDA to
maintain the current level of AERS functionality, while providing
enhancements in several areas. With more than 5 years of experience
with the database, we have identified areas of critical new
functionality, including generating web-accessible adverse event
information. The current AERS system is FDA's principal post-marketing
monitoring tool. It allows FDA to identify events that were not
observed or recognized before approval. It allows FDA to identify
adverse events that might be happening because patients and prescribers
are not using the drug as anticipated.
Beyond the modernization of the AERS system, however, we requested
these funds because the AERS system alone is not adequate for a
successful, state-of-the-art drug safety program. To appropriately
monitor drug safety after marketing, it is essential that FDA have
access to a wide range of clinical, pharmacy, and administrative
databases. These include databases maintained by organizations such as
the Center for Medicare and Medicaid Services, the Department of
Veterans Affairs, the Department of Defense, and the Indian Health
Service. We will also access clinical and hospital and pharmacy
networks and insurers, such as health maintenance organizations,
preferred provider organizations, and pharmacy benefit management
organizations.
FDA is actively evaluating the utility and feasibility of
conducting specific studies of high priority safety issues using such
linked databases. Studies conducted on these types of databases will
provide more evidence about drug use in a broader range of conditions,
including more detailed evidence about drug safety in subgroups of
patients. The planned modernizations for AERS are expected to optimize
internal access and review of adverse event.
HUMAN TISSUE SAFETY
Question. In February of this year, FDA ordered a New Jersey human
tissue recovery firm to cease operation because it found that the
company had seriously violated FDA regulations governing donor
screening and record keeping practices. FDA inspection and action
followed a news article that uncovered the fact that this company was
regularly and illegally harvesting human tissues from funeral homes.
These tissues were subsequently transplanted into dozens of patients.
What is FDA doing to make sure situations like this do not happen
again?
Answer. FDA wishes to clarify information regarding this matter. As
part of an audit consistent with FDA regulations, a tissue processor in
Florida noticed discrepancies in records supplied to it by the New
Jersey tissue recovery firm. The Florida firm then took the following
steps: initiated a recall of tissue it had processed and distributed,
quarantined tissue it still had in its possession, and notified FDA.
FDA began an inspection of the New Jersey firm in October, 2005, and
found that the firm had failed to comply with regulations designed to
prevent the spread of communicable diseases. Tissues harvested by the
New Jersey firm had been sold to several processors and subsequently
transplanted.
FDA is committed to establishing and maintaining high standards for
tissue safety and to detecting, investigating and taking enforcement
action against violations of its regulatory requirements. FDA continues
to evaluate its tissue regulations and policies on an ongoing basis.
Question. Is there a certification or licensing procedure that
tissue processing firms must go through before they can begin
operating?
Answer. FDA regulations require that tissue processing
establishments register with FDA and list their products within 5 days
after beginning operations. FDA's District Offices use these
registrations to schedule inspections to assure compliance with the
regulations designed to promote patient safety and to prevent the
spread of communicable diseases.
Question. Does FDA regularly inspect human tissue firms?
Answer. FDA performed 270 inspections of human tissue
establishments in fiscal year 2005. The Agency anticipates it will
perform 250 inspections in fiscal year 2006 and 325 inspections in
fiscal year 2007. FDA is in the process of implementing its new risk-
based approach to assure the safety of human cells, tissues, and
cellular and tissue-based products, or HCT/Ps. The Agency is using a
comprehensive approach for regulating existing and new cell and tissue
products. FDA is in the process of addressing issues related to safety
and effectiveness of a rapidly growing industry.
A rule expanding the types of tissue facilities required to
register with the FDA and list their HCT/Ps became effective January
21, 2004. The donor eligibility rule became effective May 25, 2005, and
focuses on donor screening and testing measures to prevent the
transmission of communicable diseases from the donor through HCT/Ps.
The current good tissue practice rule also became effective May 25,
2005. This rule requires manufacturers to recover, process, store,
label, package and distribute HCT/Ps in a way that prevents the
introduction, transmission, or spread of communicable diseases. These
rules are critical new tools that give FDA the ability to monitor human
tissue adverse reactions to target more effectively the products with
the highest risks.
PROPOSED USER FEES
Question. FDA is proposing two new user fees in the budget request.
One will require manufacturers to pay for the full cost of follow-up
inspections when FDA must revisit facilities because of initial bad
inspection reports. The second fee would reimburse FDA for the cost of
issuing export certificates for food and animal feeds.
Can you explain why you believe these fees are necessary?
Answer. Although FDA issues export certifications for all products
it regulates, the agency only has authority to charge a fee to issue
export certifications for human and animal drugs, and medical devices.
Timely issuance of food and feed export certificates funded through
user fees would improve the ability of food and animal feed producers
to export their products and would eliminate the current preferential
treatment of the food and feed industry differences in authority to
collect fees for the food and feed industries.
FDA conducts post-market inspections of food, human drug, biologic,
animal drug and feed, and medical device manufacturers--both domestic
and foreign--to assess their compliance with Current Good Manufacturing
Practice, or CGMP, and other FDA requirements. In 2004, approximately
1,500 out of 21,000 firms inspected were found non-compliant with CGMPs
and other important FDA requirements. Under current law, FDA does not
have the authority to assess fees for any follow-up inspections
conducted by FDA to ensure that manufacturers have addressed violations
that were found during the previous inspection. A fee for repeat
inspections will serve as an incentive to industry to conform to CGMPs
and other FDA requirements and will ensure that the financial burden of
re-inspections is more equitably shared between industry and the
public.
Both fees are designed to improve the overall management of these
activities.
Question. Has FDA sought input from impacted organizations?
Answer. Discussions with industry have not yet been held.
Question. Have you submitted the text of your legislative proposal
to the authorizing committee?
Answer. The legislative proposals are in the final stages of
review. We expect the proposals will be submitted to the Congress
within the next several weeks.
Question. Please explain the services FDA will be reimbursed for by
the re-inspection user fee.
Answer. If a firm undertakes corrective action to achieve
compliance, FDA will verify the appropriateness and completeness of the
corrective action. For the firm to satisfy FDA's concerns and, if
regulatory action was taken, to resume its full ability to market
products, the firm must be reinspected by FDA and found in compliance.
These user fees will provide funding to FDA to act in a timely
manner to ensure that noncompliant firms have taken appropriate
corrective action and to facilitate the return of compliant firms to
full marketing of violative products. Some of the activities that FDA
performs in conducting reinspections include the scheduling and
preparatory reinspection work by the FDA investigator, the reinspection
itself, sample analyses, report writing, compliance officer review and
analysis, conferring with experts, and travel and administrative time.
Question. Please explain the services FDA will be reimbursed for by
the food and animal feed certification fee.
Answer. The services FDA will be reimbursed for by the food and
animal feed certification fee include: reviewing applications and
attestations; checking of field and headquarters administrative
records, and with personnel for the compliance status of the firm;
review of the product label for compliance with the law; preparing,
processing, and issuing of the certifications, including notarization;
maintenance of applications and copies for tracking of services
rendered and for provision of certificate copies when requested; all
other clerical procedures necessary to issue the certifications within
20 days including processing of billing and receipts, and other costs
attributable to the issuance of certifications. Currently
certifications are processed on an ``as resources permits'' basis.
FOOD DEFENSE
Question. Over the past 5 years, this subcommittee has provided
more than $600 million for food defense activities at FDA. The fiscal
year 2007 budget requests an increase of $19.8 million for food defense
activities. This is a significant investment.
How has FDA used the funding we have provided to make the food
supply safer?
Answer. FDA uses the food defense funding to build upon the
Nation's core food safety and public health systems and to strengthen
our capabilities to address terrorist threats. FDA's efforts to protect
the food supply focus primarily on six major crosscutting initiatives
under Homeland Security Presidential Directive-9, also known as HSPD-9,
for food defense.
One example of FDA's HSPD-9 activities is the establishment of the
Food Emergency Response Network, a national network also known as FERN,
to increase analytic surge capacity in the event of terrorist attack by
developing adequate laboratory testing capacity for biological,
chemical and radiological agents in food. The Agency continues to
develop FERN by providing laboratory infrastructure, training, and
proficiency testing to member laboratories. FDA is conducting targeted
food defense research efforts, including prevention technologies,
methods development, determination of infectious dose for certain
agents when ingested with food, and agent characteristics within
specified foods. Also, FDA is performing more effective targeted risk-
based inspections using data from FDA's Prior-Notice system and Prior
Notice Import Security Reviews based on intelligence, FDA inspection
reports, discrepancies in prior notice reporting, and sample collection
and analysis. As part of the government-wide Biosurveillance
Initiative, FDA is improving coordination and integration of existing
food surveillance capabilities with the Department of Homeland
Security's integration and analysis function. FDA is upgrading and
expanding its Emergency Operations Network Incident Management System
to assist in the management and coordination of the Agency's response
to incidents affecting the U.S. food supply. Along with the U.S.
Department of Agriculture, the Federal Bureau of Investigation, and
Department of Homeland Security, FDA began a new collaborative effort
with States and private industry to protect the Nation's food supply
from terrorist threats through the Strategic Partnership Program
Agroterrorism Initiative. FDA has spearheaded this effort to identify
sector-wide vulnerabilities, mitigation strategies, and research needs
to protect our Nation's food supply.
Question. Does FDA have an overall plan for food defense, including
out-year costs? Can you provide this information for the record?
Answer. FDA's overall plan for food defense aligns with the
activities outlined in Homeland Security Presidential Directive-9 also
known as HSPD-9, which establishes a national policy to defend the food
and agriculture system. The directive lays out a framework for
augmenting the Nation's food safety protections by identifying and
prioritizing sector-critical infrastructure and key resources for
establishing protection requirements, developing awareness and early
warning capabilities to recognize threats, mitigating vulnerabilities
at critical production and processing nodes, enhancing screening
procedures for domestic and imported products, and enhancing response
and recovery procedures.
With regard to future activities, the fiscal year 2007 requested
funds will be used expand the Food Emergency Response Network, also
known as FERN, to include 16 State laboratories, provide grants and
technical support to these laboratories, and build analytic surge
capacity to respond to a terrorist attack. We will also use these funds
to manage, through the National Program Office, the network and to
provide training and proficiency testing for FERN laboratories. We will
continue Field support for food defense operations, including targeting
potentially high-risk imported foods through Prior Notice Import
Security Reviews based on intelligence, FDA inspection reports,
discrepancies in prior notice reporting, and sample collection and
analysis.
FDA also will continue laboratory preparedness efforts and valuable
short-term food defense research projects. Many of the projects
undertaken are derived from direct interaction with industry following
vulnerability assessments. The results of these projects can be
communicated directly to industry. These efforts will result in a
better understanding of which interventions work, and which do not, for
certain agents in specific foods.
In addition, the fiscal year 2007 requested funds will further
joint food defense and food safety assignments that will enhance and
facilitate the integration of food defense with food safety. In these
assignments, samples obtained as part of routine food safety programs
will also be tested in a variety of laboratories for a range of select
agents that are of most concern. The foods chosen for these assignments
are generally foods that we have most concern about based on
vulnerability assessments.
Out-year activities will further strengthen our food defense system
and advance the objectives identified in HSPD-9.
DRUG EFFICACY STUDY IMPLEMENTATION (DESI) MONOGRAPH SYSTEM
Question. In response to Senate Committee Report language
accompanying the fiscal year 2005 agriculture appropriations bill, FDA
prepared a report on the feasibility of developing a drug monograph
system for older prescription drugs that have been marketed for a
material extent and material amount of time without documented safety
problems. In this report, FDA stated that a monograph system would be
scientifically infeasible and cost prohibitive. However, FDA did not
propose an alternate solution to this monograph system.
The Senate Committee Report to accompany the fiscal year 2006
Agriculture appropriations bill requested a second report asking FDA to
propose an alternate approach that provides for the uniform and
transparent regulation of these products.
What is the status of this report?
Answer. FDA is working on this report and hopes to submit it to
Congress this summer.
Question. Has FDA developed an alternate method as requested in the
report language?
Answer. The agency is working on its approach to the regulation of
these products and plans to discuss alternatives in our report to the
subcommittee.
MEDICAL IMAGING DRUGS
Question. Since FDA terminated the Medical Imaging Drugs Advisory
Committee in 2002, FDA has tried to fill the gap in medical imaging
expertise by retaining experts as special government employees and
appointing them on an ad hoc basis to meetings of a standing advisory
committee when a medical imaging product or issue needs advisory
committee review. I understand that at the last advisory committee
meeting to consider a medical imaging product, which was held in March
2005, FDA appointed three medical imaging drug experts to a standing
panel of 17 experts. In light of the increasingly important role of
medical imaging drugs and medical imaging biomarkers under FDA's
Critical Path initiative, I am interested in FDA's ability to get the
necessary medical imaging expertise on these panels. How many medical
imaging experts has FDA retained as special government employees?
Answer. Currently, FDA has a list of 89 special government
employees, or SGEs, with medical imaging expertise who may be requested
to participate in regulatory activities, including FDA drug advisory
committee and device panel discussions. The 89 SGEs includes 72 members
of various Medical Devices Advisory Committees and consultants. These
SGEs are also accessible for drug review consultation.
Question. What is FDA doing to improve the recruitment of medical
imaging experts as special government employees? Are there any barriers
to such recruitment?
Answer. The ability of a special governmental employee, or SGE, to
assist in FDA activities varies considerably, based predominantly upon
competing SGE commitments and timelines. Hence, FDA is actively
recruiting additional SGEs via interactions with professional societies
and visiting professor lecture activities. Barriers to SGE recruitment
relate to conflict of interest considerations and the limited
reimbursements to SGEs.
Question. How many medical imaging expert special government
employees does FDA intend to hire in the future?
Answer. FDA is currently processing materials for 12 medical
imaging experts as potential special government employees. When
vacancies are imminent on Medical Devices Advisory Committees, FDA
requests professional society assistance in obtaining voluntary
applicants.
COLOR CERTIFICATION
Question. The fiscal year 2007 budget request includes an increase
in current law user fees of $180,000 for the Color Certification
Program. Please explain this increase.
Answer. As in previous years, FDA estimates that an increase of 3
percent in poundage will be submitted for color certification in fiscal
year 2007 over fiscal year 2006. This will generate an estimated
$180,000 in additional color certification revenue and is not related
to any rate increase for the Color Certification Program.
Question. In April 2005, FDA increased the color certification fee
through an interim final rule, with no opportunity for comment from
industry. FDA has stated this was necessary in order to ensure that the
fund was not depleted. At the same time, FDA stressed the need to keep
adequate reserves in order to ensure adequate levels of funding. Given
that FDA has worked to ensure an adequate reserve fund, would it be
possible for FDA to seek public comment in advance of any future color
certification fee increase?
Answer. Historically, solicitation of public comment has not been
deemed a prerequisite for increasing color certification fees. As
required under the Federal Food, Drug, and Cosmetic Act, also known as
the FD&C Act, Section 721(e), the fees assessed for color certification
reflect those costs necessary to provide, maintain, and equip an
adequate service for such purposes. Section 721(e) does not provide for
notice-and-comment rulemaking for assessing or increasing fees. Since
passage of the 1938 FD&C Act, FDA increased the color certification
fees several times, most recently in 1963, 1982, 1994 and 2005. FDA
stated, in the March 29, 2005 interim final rule, that the fee
modification is necessary because of a general increase in all costs of
operating the certification program. In the interim final rule, FDA
found under 5 U.S.C. 553(b)(B) and 21 CFR 10.40(e) that providing for
public comment before establishing the fees, and for revising the basis
for calculating the fees, is contrary to the public interest. Despite
this finding, the agency stated in the interim final rule that it
invited and would consider public comments on the requirements in the
rule. The interim final rule became effective on April 28, 2005, and
FDA requested comments by May 31, 2005. Comments, as well as a request
for a stay of the effective date and a citizen petition, were submitted
to the docket and are under consideration.
Question. Has FDA taken any steps to make the color certification
fees and program expenses more transparent?
Answer. FDA's Office of Financial Management, also known as OFM,
occasionally submits certification fund updates to industry
representatives; this information is always provided to industry
representatives upon request. OFM maintains detailed accounting records
of color certification expenditures and other related non-proprietary
information. These statements include expenditure reports, status of
funds reports, and projected yearly estimates for the various
allowances within the Color Certification program.
Question. Please provide a list of anticipated equipment needs,
including estimated costs, necessary to maintain adequate service for
certification of batches of color additives.
Answer. I would be happy to provide that information for the
record.
[The information follows:]
COLOR CERTIFICATION PROGRAM--ANTICIPATED EQUIPMENT NEEDS AND RELATED
COSTS--FISCAL YEAR 2007-FISCAL YEAR 2009
------------------------------------------------------------------------
Estimated Cost
Item Description (per three
years)
------------------------------------------------------------------------
Maintenance contract for computer Certification $300,000
database. operating system
and web-based
industry interface.
Maintenance contracts for large High-performance 250,000
equipment. liquid
chromatographs
(approximately 21
systems).
Liquid chromatograph/ 25,000
mass selective
detector.
X-ray fluorescence 60,000
spectrometer.
Atomic absorption 30,000
spectrometer.
Ion chromatograph... 16,500
Microwave digestion 15,000
and ashing systems.
Replacement parts for equipment... X-ray fluorescence 75,000
spectrometer (x-ray
tubes, sample
changer parts,
helium/vacuum
switch).
Atomic absorption 30,000
spectrometer
(furnace tubes,
lamps).
Microwave digestion 7,500
and ashing systems
(parts, crucibles).
Shatterbox (grinding 5,000
tools).
Pellet press (press 2,500
tools).
Anticipated new large equipment... High-performance 460,000
liquid
chromatographs
(expect to purchase
two annually).
X-ray fluorescence 350,000
spectrometer.
Liquid chromatograph/ 120,000
mass selective
detector.
Ion chromatograph... 10,000
Preparative high- 45,000
performance liquid
chromatograph.
Flash preparative 25,000
chromatograph.
Automatic titrator.. 17,000
Microwave ashing 20,000
system.
Fusion machine and 50,000
platinum ware.
Freeze drier........ 15,000
Microwave 20,000
synthesizer.
Uninterruptible 30,000
power supply.
Reaction system..... 20,000
Anticipated new small equipment... Analytical balances 250,000
(5), top-loading
balances, lab
computers,
spectrophotometers,
fluorescence
detector, moisture
analyzer,
centrifuge rotor,
digital camera.
Hazardous waste disposal.......... Disposal of chemical 300,000
waste.
Stockroom contract................ Reagents, glassware, 330,000
misc. lab supplies.
Misc. purchases................... Computer software, 400,000
reagents, misc. lab
supplies.
---------------
Total....................... .................... 3,278,500
------------------------------------------------------------------------
Question. What is the anticipated timeframe for these equipment
needs?
Answer. Certification requirements are assessed in 3 year cycles.
FDA's anticipated timeframe for these equipment needs is 3 years.
FOOD CONTACT SUBSTANCES
Question. Since its implementation 6 years ago, the Food Contact
Notification program has been successful. I understand that the Food
Contact Notification program requires less FDA resources than the
previously used Food Additive Petition process because the FCN program
does not require the Agency to follow Notice and Comment Procedures and
promulgate a new regulation. In addition, the clearance of a new
material under the Food Additive Petition program typically took 2 to 4
years, but the Notification program only takes 4 months. The success of
the program has led to the clearance of over 500 new types of packaging
materials.
If the FCN program is more efficient, why would FDA seek to
eliminate the program and return to promulgating regulations, and how
does FDA plan to accomplish its statutory mandate under the food
additive petition process when it does not seek to add additional
resources to handle these submissions?
Answer. The Food Contact Notification, also known as FCN, program
has been very successful. Under the FCN program, if FDA does not object
within the 120-day review period, a company can legally market its
product. To date, FDA has always met the 120-day deadline. In contrast,
under the Food Additive Petition, also known as FAP, program, the
petitioned food contact substance cannot lawfully be marketed until a
regulation is published by FDA. Reverting to the FAP process for food
contact substances will not have an adverse impact on the public health
because these substances cannot be marketed until FDA completes a full
safety review of each substance. Prior to the implementation of the FCN
program, FDA had implemented many changes to the FAP process and had
made significant progress in streamlining the review of food additive
petitions. Although FDA does not expect to be able to meet its
statutory mandate of publishing a decision on a petition within 180
days of filing, we will continue our efforts to streamline the petition
review process and to reach decisions in a timely manner.
Question. What is FDA's assessment of the impact that the
elimination of the FCN program will have on packaging innovation and on
public health?
Answer. Elimination of the FCN program will not have a significant
adverse impact on the public health because pre-market approval of food
contact substances will still be required and food contact substances
will still have to meet the same safety standard so that unsafe food
contact substances do not reach the market. As in the past, petitions
in which the subject additive is intended to have an impact on the
public health, for example reducing pathogens on food, will be
prioritized and expedited through the review and administrative
process. Thus any impact on public health will be minimal.
NEW DRUG APPLICATIONS
Question. On February 13, 2006, the Justice Department, on behalf
of FDA, represented to the U.S. District Court for the District of
Columbia that the Omnitrope New Drug Application, which was submitted
in fiscal year 2003, is still undergoing active review by the Agency.
However, in the FDA's fiscal year 2007 budget submission the Agency
reported that, for NDA submissions during fiscal year 2003, which would
include this application, FDA reviewed and acted on ``100 percent of
82'' fiscal year 2003 NDA submissions by the end of fiscal year 2004.
Please explain this apparent discrepancy. Was action completed on all
NDAs or are there submissions from fiscal year 2003 still under review?
Answer. As FDA described in an August 2004 letter to the sponsor of
the Omnitrope NDA, the reviewing division had completed its review of
the information in the NDA. However, because the agency was considering
related scientific and legal issues in its review of pending citizen
petitions, and scientific considerations related to the approval of
products like Omnitrope were to be the subject of a series of public
meetings, FDA was not ready to make an approval decision on the
application. The agency deferred a decision on the Omnitrope NDA until
the agency knew whether the data in the NDA was sufficient for approval
and, if not, what additional substantive information and data might be
necessary to support approval. The letter identified what additional
steps had to be completed before the agency could inform the sponsor of
the actions necessary to place the Omnitrope NDA in condition for
approval. Therefore, it was considered an action in accordance with the
PDUFA performance goals. All fiscal year 2003 NDA submissions have been
completed and final performance has been reported.
SUNSCREEN MONOGRAPHS
Question. The statement of managers accompanying the fiscal year
2006 conference report directed FDA to issue a comprehensive final
monograph for labeling over-the-counter sunscreen products, including
UVA and UVB labeling requirements, by May 10, 2006. Please describe the
status of FDA's efforts or plans to finalize the sunscreen labeling
guidelines by this deadline.
Answer. We are currently working on a rulemaking for OTC sunscreen
drug products to address both UVA and UVB labeling requirements. We are
currently working to publish the document for this rulemaking in the
Federal Register.
______
Questions Submitted by Senator Mitch McConnell
NATIONAL INSTITUTE FOR PHARMACEUTICAL TECHNOLOGY AND EDUCATION
Question. In June 2005 the Center for Drug Evaluation and
Research's Office of Pharmaceutical Science within the Food and Drug
Administration (FDA) signed a Memorandum of Agreement with the National
Institute for Pharmaceutical Technology and Education (NIPTE). The
University of Kentucky (UK) is a member of NIPTE.
As the FDA considers funding priorities for fiscal year 2007, I am
interested in answers to the following questions raised by NIPTE and
UK.
The Memorandum of Agreement expresses the FDA's desire to
collaborate with NIPTE on issues related to pharmaceutical development,
manufacturing practices and technologies.
To date, what interaction has the FDA had with NIPTE?
Answer. FDA has had some preliminary discussions with NIPTE about
issues of mutual interest. NIPTE has expressed concerns about the level
of products failing during development.
Question. NIPTE has concerns that product failure during
development is often related to the transition from a laboratory
prototype to final product. They have expressed concerns that the
limited amount of research into these failures causes production
technology to lag behind efforts to discover new compounds.
Do you anticipate that the relationship between FDA and NIPTE will
promote a more efficient therapy development and production process and
if so, how?
Answer. It is not possible to determine, at this time, the outcome
of any interactions with NIPTE. FDA works with many academic
institutions and other interested parties on pharmaceutical development
and manufacturing research to support FDA policy relating to Process
Analytical Technologies product applications.
Question. The FDA's stated goal of the Critical Path to New Medical
Products initiative is to modernize the scientific process through
which drugs and other treatments are transformed from ``proof of
concept'' into medical products.
How can the FDA take advantage of the infrastructure and resources
of NIPTE's member institutions to promote the goals of the Critical
Path initiative?
Answer. We expect the new manufacturing science created through
CDER's contract with NIPTE to promote manufacturing process
improvements as part of the Critical Path Initiative. It is not
possible to determine, at this time, whether FDA can take further
advantage of infrastructure and resources at NIPTE. FDA believes that
the best way to advance the goals of Critical Path is to stimulate
broad-based efforts that advance the goals of this initiative.
______
Questions Submitted by Senator Sam Brownback
CLINICAL TRIALS
Question. I understand the FDA has regulatory authority to utilize
a number of various controls to determine efficacy in the clinical
trials process, which include the use of historical controls and
placebo controls.
Is the FDA considering increasing the frequency of approval for
study designs involving historical controls or even Bayesian
statistics?
Answer. FDA is actively considering, under its critical path
initiative, a variety of study designs, methods of analysis, and uses
of data from other studies to improve decision making and the rate of
success of studies. Although FDA does not approve study designs, we do
discuss with sponsors whether we are likely to consider a particular
design as representing an adequate and well-controlled study that could
support approval under the Federal Food, Drug, and Cosmetic Act. The
appropriate use and applicability of historical controls in which
treatment of a group of patients is compared to well-documented
experience from other studies is considered in detail in the ICH
guidance E-10 known as the Choice of Control Group and Related Issues
in Clinical Trials. FDA's regulations at 21 CFR 314.126, state that
historical controls can be an acceptable kind of ``adequate and well-
controlled study,'' but only in special circumstances, such as studies
of diseases with high and predictable mortality. Such controls are
regularly used now, for example, in accelerated approvals of anti-
cancer drugs based on tumor response rates. See 21 CFR 314.500. It is
possible, and is worth studying, particularly for rare diseases, that
better documentation of the natural history of diseases will provide a
basis for wider use of historically controlled trials. With regard to
medical devices, FDA's regulations at 21 CFR 860.7, allow for a wide
variety of valid scientific evidence for premarket approval
applications, including historical controls, where appropriate.
FDA has viewed Bayesian approaches as an alternative method in the
design and evaluation of clinical studies. The frequency of use of such
an approach is related to the medical product itself, the sponsor, the
target population, and many other factors. Although FDA would consider
the use of Bayesian statistics, few drug sponsors propose such designs.
In May 2004, in an effort to emphasize our willingness to examine such
designs, FDA and Johns Hopkins University jointly sponsored a very
well-attended workshop for industry, academia, and government entitled,
``Can Bayesian Approaches to Studying New Treatments Improve Regulatory
Decision-Making?'' The Center for Devices and Radiological Health has
accepted designs involving Bayesian statistics since 1998, and there
has been an increase in the frequency of investigational device
exemptions that use Bayesian design and plan appropriate analyses.
Question. Please list the number of cancer drugs for which the FDA
approved a study design that included a placebo-controlled trial, over
the past 4 year period.
Answer. FDA does not ``approve'' study designs or protocols.
Companies generally develop an overall drug development strategy,
including specific protocols, to seek registration or approval in
multiple countries such as the European Union, Japan, Switzerland,
Canada, and Australia. FDA reviews, but does not approve these
protocols.
In cancer settings, the term placebo-controlled is a misnomer. It
is very rare for a cancer patient to only receive a placebo. Whenever
possible, FDA encourages use of another available therapy as an active-
control rather than a placebo. In situations where an active-control
study cannot be conducted, FDA seeks to ensure that all patients
receive best supportive care in addition to the test-article or placebo
to which they are randomized.
Question. Please describe the process by which a cancer patient who
has exhausted all other treatment options can gain access to a drug
that has shown efficacy in an earlier stage of the clinical trials
process.
Answer. The FDA has a long-standing commitment to desperately ill
patients, including patients with cancer, to facilitate the
availability of promising new drugs during the drug development
process, when promising drugs are being studied, but are not yet
approved for marketing. FDA's statute and regulations enable a patient
suffering from a serious or immediately life threatening disease for
whom no comparable or satisfactory alternative drug or other therapy is
available to get access to a promising investigational drug. FDA is
developing regulations to further clarify and publicize the expanded
access mechanisms for such treatment use of investigational new drugs,
in the belief that such new regulations will increase the awareness of
and participation in expanded access programs. However, it should be
noted that FDA does not have authority to compel a sponsor to make an
investigational new drug available for treatment use.
In December 2003, FDA submitted to Congress its report on Patient
Access to New Therapeutic Agents for Pediatric Cancer. This report
includes how patients can access investigational drugs under current
rules. I would be happy to provide for the record, the section of the
report that describes our current system.
[The information follows:]
EXISTING PROGRAMS
Access Outside of Clinical Trials
It is not always possible for all patients who want access to
investigational drugs to enroll in clinical trials. Patients may not
meet eligibility criteria or may be geographically isolated from a
study site. It may be difficult to find an ongoing trial for a
particular type and stage of cancer. In these situations, FDA and NCI
believe that it is appropriate to help make certain promising, but as
yet unproven, products available outside of a clinical trial (non-
protocol) to patients with cancer as well as other serious and life-
threatening illnesses. Non-protocol investigational therapy should be
offered in a way that does not pose an unreasonable risk to the patient
or an unreasonable risk of losing valuable information about the effect
of the drug. For these reasons, although treatment is focused on the
individual patient, a study plan (protocol) may be written to ensure
that the treatment is administered appropriately and that patients are
monitored for toxicity. The programs available through both agencies
are discussed below. It is important to note that a pharmaceutical
manufacturer must first agree to provide the requested product for a
non-protocol investigational therapy to begin. NCI and FDA cannot
mandate that the requested products be supplied to these programs; the
agencies can only review and approve proposals to use them.
FDA Programs for Non-protocol Access
FDA programs that permit non-protocol access to investigational
agents for patients with serious or life-threatening disease include
the single patient IND, the emergency IND, and the Treatment IND
(sometimes informally referred to as an expanded access protocol). The
lay public frequently refers to these programs as compassionate use,
although the term compassionate use does not appear in FDA regulations.
Single patient or emergency INDs refer to a treatment program for a
single individual. Treatment IND refers to a single study plan used to
treat multiple patients.
Single Patient IND Submissions
Single-patient IND submissions can represent entirely new uses for
a drug or exceptions to an ongoing clinical trial protocol for a
patient who does not meet protocol entry criteria. Single patient IND
requests can be submitted as amendments to an existing IND or as an
entirely new IND. They can be submitted by a drug manufacturer (usually
amending an existing IND) or by an individual physician, following
usual procedures for IND filing, including IRB review and informed
consent. If the need for treatment is urgent and does not allow time
for submission of an IND, an emergency IND can be obtained allowing FDA
to authorize shipment of a drug for the specified use before the IND is
submitted (21 CFR 312.36). The IND should then be submitted as soon as
possible after receiving authorization. As with all INDs, both
mechanisms require adverse event reporting and an annual summary to be
submitted to FDA.
Treatment IND
Treatment IND study plans ``facilitate the availability of
promising new drugs to desperately ill patients as early in the drug
development process as possible, before general marketing begins, and
obtain additional data on the drug's safety and effectiveness'' (21 CFR
312.34). Certain criteria must be met for a drug to be considered for
approval in a Treatment IND,1 including:
--The patients' disease must be serious or life-threatening.
--No comparable or satisfactory treatment is available to the target
population of patients.
--The drug is in clinical trials (generally Phase 3 and not
ordinarily prior to Phase 2).
--The sponsor of the clinical trials is actively pursuing marketing
of the drug.
FDA may refuse the request if:
--For a serious disease, sufficient evidence of safety and potential
efficacy is not provided to support use of the drug to treat
it.
--For a life-threatening disease, available scientific evidence does
not provide a reasonable basis for concluding that the drug may
be effective and would not expose patients to serious
additional risk of illness or injury.
The same safeguards and reporting requirements that apply to any
IND study apply to a Treatment IND, including IRB approval. The study
plan must contain a rationale for the use of the investigational drug,
as well as a list of what available regimens should be tried prior to
its use, or an explanation of why the use of the investigational drug
is preferable to the use of available marketed treatments.
NCI Programs for Non-protocol Access
At NCI, Special Exception and Group C protocols provide access to
investigational agents for those patients unable to participate in a
clinical trial.
Special Exception
The Special Exception is comparable to the single patient IND, but
investigators may obtain investigational agents directly from NCI using
NCI's Special Exception mechanism instead of filing a new IND with FDA.
NCI does not grant these requests for drugs in Phase 1 development,
because NCI requires some demonstration of efficacy before permitting
individual treatment. The written policy for this program requires
objective evidence that the investigational agent is active in the
disease for which the request is being made.
Anecdotal reports or reports that show low response rates or
responses of brief duration are not sufficient to justify approval of
the request. Patients must be ineligible for ongoing research protocols
and must have received standard therapies.
Group C
Group C designation is an expanded access program similar to a
Treatment IND that allows broadened access to investigational agents
with reproducible activity in one or more specific tumor types. An
agent must alter or be likely to alter the pattern of treatment of the
disease, and properly trained physicians without specialized supportive
care facilities must be able to administer the agent safely. For an
agent that meets this definition, CTEP may submit a formal application
to FDA to authorize distribution of the agent (Group C distribution) by
NCI for the specific indication described in the application. This
application is not a marketing application, and FDA approval of a Group
C protocol does not replace an FDA conclusion that the drug is safe and
effective. The study plan must contain the indication, dosage,
precautions, warnings, known adverse events of the product, and an
informed consent form. Approval of the Group C protocol carries the
obligation of the usual safety reporting requirements. This mechanism
is used only with agents for which activity is sufficiently established
and for which a New Drug Application (NDA) or Biological Licensing
Application (BLA) approval is considered likely in the relatively near
future.
______
Questions Submitted by Senator Herb Kohl
FIELD STAFF
Question. We discussed earlier the decrease in FDA field force, and
I was told that this was a result of the streamlining of the FDA
inspection process, and would not result in fewer, or less effective,
inspections.
Please provide specific numbers of inspections that are scheduled
to take place by all FDA field staff members in fiscal year 2007.
Please organize these into the types of inspections FDA performs--for
example, inspections of feed manufacturers, ports, food manufacturers,
drug companies, overseas companies, etc. How do each of these numbers
compare to fiscal year 2006 and 2005 levels?
Answer. I will be happy to provide a table that lists activities,
by type of inspections, for fiscal years 2005, 2006, and 2007 for the
record. Traditionally, that information is captured in a table
entitled, ``Combined Field Activities--ORA Program Activity Data'' that
appears in the published fiscal year 2007 FDA Congressional
Justification, pages 272-277.
[That information follows:]
COMBINED FIELD ACTIVITIES--ORA PROGRAM ACTIVITY DATA
----------------------------------------------------------------------------------------------------------------
Fiscal year Fiscal year Fiscal year
2005 actual 2006 estimate 2007 estimate
----------------------------------------------------------------------------------------------------------------
FOODS FIELD
Program Outputs--Domestic Inspections:
Domestic Food Safety Program Inspections.................... 4,573 3,400 3,400
Imported and Domestic Cheese Program Inspections............ 477 400 400
Domestic Low Acid Canned Foods/Acidified Foods Inspections.. 481 400 400
Domestic Fish & Fishery Products (HACCP) Inspections........ 2,467 2,480 2,480
Import (Seafood Program Including HACCP) Inspections........ 500 500 500
Juice HACCP Inspection Program (HACCP)...................... 490 375 375
Interstate Travel Sanitation (ITS) Inspections.............. 1,510 1,700 1,700
State Contract Food Safety (Non HACCP) Inspections.......... 6,992 8,130 8,130
State Contract Domestic Seafood HACCP Inspections........... 953 1,135 1,135
State Contract Juice HAACP.................................. 35 35
State Partnership Inspections............................... 1,284 1,300 1,300
-----------------------------------------------
Total Above FDA and State Contract Inspections............ 19,774 19,855 19,855
-----------------------------------------------
Total Domestic Reinspections (Non-add).................... 523 523 523
===============================================
State Contract and Grant Foods Funding...................... $6,825,000 $7,100,000 $6,940,000
Number of FERN State Laboratories........................... 8 10 16
Annual FERN State Cooperative Agreements/Operations......... $12,270,000 $7,037,000 $12,236,000
-----------------------------------------------
Total State & Annual FERN Funding......................... $19,095,000 $14,137,000 $19,176,000
===============================================
Domestic Field Exams/Tests.................................. 3,528 5,000 5,000
Domestic Laboratory Samples Analyzed........................ 15,390 11,425 9,425
All Foreign Inspections..................................... 129 200 100
-----------------------------------------------
Total Foreign Reinspections (Non-add)..................... 15 15 15
===============================================
Import Field Exams/Tests.................................... 84,997 75,000 71,000
Import Laboratory Samples Analyzed.......................... 25,549 31,600 29,600
-----------------------------------------------
Import Physical Exam Subtotal............................... 110,546 106,600 100,600
===============================================
Import Line Decisions....................................... 8,672,168 10,059,715 11,669,269
Percent of Import Lines Physically Examined................. 1.27 1.06 0.86
Prior Notice Security Import Reviews (Bioterrorism Act 86,187 45,000 60,000
mandate)...................................................
COSMETICS FIELD
Program Outputs--Domestic Inspections:
All Inspections............................................. 138 100 100
-----------------------------------------------
Total Domestic Reinspections (Non-add).................... 7 7 7
===============================================
Program Outputs--Import/Foreign Inspections:
Import Field Exams/Tests.................................... 1,983 2,000 2,000
Import Laboratory Samples Analyzed.......................... 241 200 200
-----------------------------------------------
Import Physical Exam Subtotal............................. 2,224 2,200 2,200
===============================================
Import Line Decisions....................................... 1,146,049 1,398,180 1,705,779
Percent of Import Lines Physically Examined............... 0.19 0.16 0.13
DRUGS FIELD
Program Outputs--Domestic Inspections:
Pre-Approval Inspections (NDA).............................. 149 130 130
Pre-Approval Inspections (ANDA)............................. 81 135 135
Bioresearch Monitoring Program Inspections.................. 562 520 520
Drug Processing (GMP) Program Inspections................... 1,365 1,500 1,440
Compressed Medical Gas Manufacturers Inspections............ 125 155 150
Adverse Drug Events Project Inspections..................... 106 135 135
OTC Monograph Project Inspections and Health Fraud Project 53 11 45
Inspections \1\............................................
State Partnership Inspections: Compressed Medical Gas 85 110 110
Manufacturers Inspections..................................
State Partnership Inspections: GMP Inspections.............. 57 50 50
-----------------------------------------------
Total Above FDA and State Partnership Inspections......... 2,594 2,780 2,715
-----------------------------------------------
Total Domestic Reinspections (Non-add).................... 220 220 220
===============================================
Domestic Laboratory Samples Analyzed........................ 1,446 1,735 1,600
===============================================
Programs Outputs--Import/Foreign Inspections:
Foreign Pre-Approval Inspections (NDA)...................... 163 180 180
Foreign Pre-Approval Inspections (ANDA)..................... 77 60 60
Foreign Bioresearch Monitoring Program Inspections.......... 85 65 65
Foreign Drug Processing (GMP) Program Inspections........... 217 195 195
Foreign Adverse Drug Events Project Inspections............. 10 25 25
-----------------------------------------------
Total Above Foreign FDA Inspections....................... 52 525 525
-----------------------------------------------
Total Foreign Reinspections (Non-add)..................... 17 17 17
===============================================
Import Field Exams/Tests.................................... 4,288 4,400 4,400
Import Laboratory Samples Analyzed.......................... 1,045 355 300
-----------------------------------------------
Import Physical Exam Subtotal............................... 5,333 4,755 4,700
===============================================
Import Line Decisions....................................... 264,559 317,471 380,965
Percent of Import Lines Physically Examined................. 2.01 1.50 1.23
===============================================
BIOLOGICS FIELD
Program Outputs--Domestic Inspections:
Bioresearch Monitoring Program Inspections.................. 121 156 156
Blood Bank Inspections...................................... 1,439 1,130 1,070
Source Plasma Inspections................................... 188 165 160
Pre-License, Pre-Approval (Pre-Market) Inspections.......... 3 10 10
GMP Inspections............................................. 42 36 36
GMP (Device) Inspections.................................... 14 35 35
Human Tissue Inspections.................................... 270 250 325
-----------------------------------------------
Total Above Domestic Inspections.......................... 2,077 1,782 1,792
-----------------------------------------------
Total Domestic Reinspections (Non-add).................... 50 50 50
===============================================
Program Outputs--Import/Foreign Inspections:
Blood Bank Inspections...................................... 16 24 24
Pre-License Inspections..................................... 6 .............. ..............
GMP Inspections............................................. 15 24 17
-----------------------------------------------
Total Above Foreign FDA Inspections....................... 37 48 41
-----------------------------------------------
Total Foreign Reinspections (Non-add)..................... 4 4 4
===============================================
Import Field Exams/Tests 1.................................. 143 100 100
Import Line Decisions....................................... 39,979 44,377 49,258
Percent of Import Lines Physically Examined................. 0.36 0.23 0.20
ANIMAL DRUGS & FEEDS FIELD
Program Outputs--Domestic Inspections
Pre-Approval/BIMO Inspections............................... 72 140 110
Drug Process and New ADF Program Inspections................ 230 210 210
BSE Inspections............................................. 3,025 3,760 3,760
Feed Contaminant Inspections................................ 3 15 15
Illegal Tissue Residue Program Inspections.................. 203 245 245
Feed Manufacturing Program Inspections...................... 369 240 40
State Contract Inspections: BSE............................. 3,309 4,562 4,562
State Contract Inspections: Feed Manufacturers.............. 457 347 347
State Contract Inspections: Illegal Tissue Residue.......... 370 750 600
State Partnership Inspections: BSE and Other................ 988 900 900
-----------------------------------------------
Total Above FDA and State Contract Inspections............ 9,036 11,169 10,789
-----------------------------------------------
Total Domestic Reinspections (Non-add).................... 173 173 173
===============================================
State Animal Drugs/Feeds Funding............................ $1,300,000 $1,700,600 $1,800,000
BSE Grant Increase.......................................... $3,000,000 $3,000,000 $3,000,000
State Contract for Tissue Residue........................... $220,000 $220,000 $210,000
-----------------------------------------------
Total State Funding....................................... $4,520,000 $4,920,600 $5,010,000
===============================================
Domestic Laboratory Samples Analyzed........................ 1,841 1,770 1,730
===============================================
Programs Outputs--Import/Foreign Inspections:
Foreign Pre-Approval/Bioresearch Monitoring Program Inspec 26 45 45
tions......................................................
Foreign Drug Processing and New ADF Program Inspections..... 12 10 10
-----------------------------------------------
Total Above Foreign FDA Inspections....................... 38 55 55
-----------------------------------------------
Total Foreign Reinspections (Non-add)..................... 3 3 3
===============================================
Import Field Exams/Tests.................................... 4,298 4,500 4,500
Import Laboratory Samples Analyzed.......................... 753 1,120 900
-----------------------------------------------
Import Physical Exam Subtotal............................... 5,051 5,620 5,400
===============================================
Import Line Decisions....................................... 212,254 235,602 261,518
Percent of Import Lines Physically Examined................. 2.38 2.39 2.06
===============================================
DEVICES FIELD
Programs Outputs--Domestic Inspections:
Bioresearch Monitoring Program Inspections.................. 329 300 300
Pre-Approval Inspections.................................... 64 130 130
Post-Market Audit Inspections............................... 63 65 65
GMP Inspections (Levels I, II, III and Accredited Persons).. 1,430 1,530 1,530
-----------------------------------------------
Total Above Domestic Inspections: Non MQSA................ 1,886 2,025 2,025
===============================================
Inspections (MQSA) FDA Domestic (non-VHA)................... 366 335 371
Inspections (MQSA) FDA Domestic (VHA)....................... 32 32 32
Inspections (MQSA) by State Contract........................ 8,340 7,924 7,700
Inspections (MQSA) by State non-Contract.................... 545 530 530
-----------------------------------------------
Total Above Domestic Inspections: MQSA.................... 9,283 8,821 8,633
-----------------------------------------------
Total Domestic Reinspections (Non-add).................... 237 237 237
===============================================
State Contract Devices Funding.............................. $1,350,000 $250,000 $275,000
State Contract Mammography Funding.......................... $9,800,000 $9,200,000 $9,940,000
-----------------------------------------------
Total State Funding....................................... $11,150,000 $9,450,000 $10,215,000
===============================================
Domestic Radiological Health Inspections.................... 107 130 130
Domestic Field Exams/Tests.................................. 944 1,215 1,215
Domestic Laboratory Samples Analyzed........................ 200 217 217
===============================================
Programs Outputs--Import/Foreign Inspections:
Foreign Bioresearch Monitoring Inspections.................. 6 10 10
Foreign Pre-Approval Inspections............................ 17 34 34
Foreign Post-Market Audit Inspections....................... 26 27 27
Foreign GMP Inspections..................................... 225 207 189
Foreign MQSA Inspections.................................... 16 15 15
Foreign Radiological Health Inspections..................... 9 19 19
-----------------------------------------------
Total Above Foreign FDA Inspections....................... 299 312 294
-----------------------------------------------
Total Foreign Reinspections (Non-add)..................... 24 24 24
===============================================
Import Field Exams/Tests.................................... 6,901 5,000 5,000
Import Laboratory Samples Analyzed.......................... 1,333 1,440 1,440
-----------------------------------------------
Import Physical Exam Subtotal............................... 8,234 6,440 6,440
===============================================
Import Line Decisions....................................... 3,484,393 4,460,023 5,708,829
Percent of Import Lines Physically Examined................. 0.24 0.14 0.11
----------------------------------------------------------------------------------------------------------------
\1\ The OTC Monograph and Health Fraud Inspections will no longer be planned separately in fiscal year 2006.
AVIAN FLU
Question. Is there any vaccine currently available that would
protect humans from the H5N1 flu virus? How much? Please include
experimental and approved, and explain the difference, and how the
distribution would occur.
Answer. There is currently no FDA-approved vaccine available to
protect humans from the H5N1 influenza virus that currently is
circulating in Asia and parts of Europe. However, candidate H5N1
vaccines are in development.
In 2004, the National Institute of Allergy and Infectious Diseases,
or NIAID, awarded two contracts for the production and clinical testing
of H5N1 vaccines based on an H5N1 reference strain produced through
reverse genetics. These vaccines are currently under evaluation in
clinical trials, under protocols developed with FDA input. We have
stated that, if provided adequate data, we would be able to approve a
pandemic influenza strain that is used in an existing licensed vaccine
process, in an expedited manner and without requiring a new license.
Therefore, as the results of these studies are submitted to us by
licensed manufacturers, we will be able to consider them rapidly for
approval as supplements to existing vaccine licenses. Currently,
unlicensed vaccines made with new technologies or with the addition of
adjuvants to stimulate the immune response would require more extensive
evaluation by FDA as new products. However, we are providing
accelerated development and evaluation pathways to help assure the
safety and immunogencity of new influenza vaccines as efficiently and
rapidly as possible.
To help manufacturers develop pandemic and seasonal influenza
vaccines, we recently issued two draft guidances. These guidances
provide recommendations on developing the information needed to show
safety and effectiveness for new vaccines and outline expedited
pathways to licensure. Among the issues discussed in the guidances are
the use of new technologies, such as cell culture, recombinant
technologies, and the use of adjuvants, in vaccine development and
production.
To facilitate the availability of pandemic influenza vaccines prior
to their licensure, if needed in an emergency, FDA could evaluate the
benefit/risk ratio of pandemic influenza vaccines and, where
appropriate, make such vaccines available under other regulatory
mechanisms, including investigational new drug or Emergency Use
Authorizations. With regard to vaccine distribution, the Department of
Health and Human Services, or HHS, has announced procurement for the
Strategic National Stockpile, also known as SNS, which includes
vaccines that could be distributed for use in the event of a potential
influenza pandemic. HHS provides oversight of the SNS, including
responsibility for procurement and maintenance of vaccines and other
medical products to be used in the event of an influenza pandemic or
other public health emergency. FDA's role is to provide technical
assistance and support for HHS efforts regarding the development,
procurement, maintenance, and deployment of pandemic influenza
countermeasures and other medical products held in the SNS.
After consultation with HHS, FDA offers the following information
on the status of HHS efforts to support the stockpiling and
distribution of candidate pandemic vaccines. Based on the latest
scientific research, which indicates that two 90 microgram doses of the
pre-pandemic H5N1 vaccine will be effective as a course of vaccination,
HHS has ordered approximately 4 million courses of the vaccine. Of the
4 million courses, approximately 3.75 million courses have been
manufactured, with the remaining courses on order. These courses are
not being held in the Strategic National Stockpile; rather, they are
being stored in bulk at cGMP-compliant storage facilities of the
vaccine manufacturers awaiting instructions for formulation and fill
finish into final containers. HHS will review clinical results from
studies this summer which may indicate that adding adjuvant to the H5N1
vaccine may boost immune response to those who receive the vaccination.
Once these results have been obtained and all doses are formulated and
filled accordingly, they may be distributed to critical workforce
groups as needed. Currently plans are for the H5N1 vaccine to reside
with the vendor or vaccine manufacturer until deployment.
Question. Please summarize the FDA's ability, and timeframe
necessary, in order to mass-produce vaccines for a human strain of
H5N1?
Answer. FDA is actively engaged in facilitating the efforts of
DHHS, manufacturers and other partners to develop and make available
influenza vaccines, including those for the currently circulating H5N1
strain. While FDA can rapidly evaluate and approve the use of a new
vaccine strain by a licensed manufacturer, and a new vaccine could
start to become available within 4 months of its identification,
current U.S. influenza vaccine manufacturing and the available
technologies that support it are not adequate to quickly produce enough
pandemic vaccine for the U.S. population. Therefore, we are
aggressively supporting multiple efforts to increase manufacturing
capacity using both new and existing technologies, including antigen
sparing vaccines using both aluminum and novel adjuvants, which is a
nonspecific simulators of immune response, as well as live attenuated
vaccines, and cell-culture based and recombinant vaccines, which
involves combining DNA from two or more sources. FDA scientists work
with manufacturers throughout the year to collect information on the
capability of new influenza viruses to be used for large-scale
production of influenza virus vaccines and to provide needed reagents
and technical assistance. FDA has initiated annual inspections of
licensed influenza vaccine manufacturers to help ensure that
manufacturers are in compliance with good manufacturing practices, and
to identify and, where possible, prevent problems ahead of time, and
thus are able to manufacture safe and effective pandemic influenza
vaccines in emergent circumstances.
Increasing the Agency's capacity to facilitate rapid evaluation,
product testing, licensure, and production of vaccines is critical to
expanding product availability, assuring timely and expert evaluation
of product quality, supporting national preparedness and response
capacities for pandemic influenza, and achieving public confidence in
vaccine products. The funds requested for fiscal year 2007 are critical
to achieving our goal of supporting a process whereby manufacturers can
produce pandemic influenza vaccine in the shortest possible time to
protect the greatest number of people, using a vaccine that is safe,
effective, and easy to deliver.
With regard to vaccine production issues, we will use fiscal year
2007 requested funds to facilitate HHS and manufacturers' efforts to
increase domestic manufacturing capacity to meet HHS goals, including a
stockpile with enough vaccine to vaccinate 20 million people. FDA is
supporting the longer term goals of HHS, manufacturers, and other
partners to achieve pandemic surge production capacity that would make
it possible to provide licensed vaccine for the entire U.S. population
within 6 months of a strain being isolated, using a combination of
current egg-based and, potentially, new high-volume, rapid response
cell-based production. How quickly these goals can be met will in part
be dependent on the results of current industry vaccine development
programs, mostly assisted by HHS, including ongoing studies of
adjuvanted and cell culture vaccines. In 2005, we were able to very
rapidly facilitate the evaluation and U.S. licensure of an additional
annual influenza vaccine, using our accelerated approval process,
helping avoid major shortages. We will continue to do everything
possible to facilitate both the process of vaccine development and the
enhancement of manufacturing capacity, and Congress' support is
critical in assuring FDA's capacity to both prepare for and respond to
a pandemic.
Question. The budget proposes over $55 million for pandemic flu
preparedness. The very earliest this funding would be available is
October 1, but we are hearing reports that the virus could arrive here
in the United States, at least in birds, and potentially in humans,
prior to that.
Do you believe we can afford to wait until the fiscal year 2007
bill to make this money available to FDA? If so, why? Would you support
adding the additional funding to the pending supplemental in order to
make it available more quickly?
Answer. Thank you for the opportunity to discuss the funding of
FDA's Pandemic Preparedness activities. We appreciate your interest in
supporting the FDA efforts in this initiative. The President's budget
requests in fiscal year 2006 and fiscal year 2007 were carefully
considered with respect to identifying the immediate needs and the
urgent nature of the overall initiative. The most immediate needs are
identified in the fiscal year 2006 supplemental request and the fiscal
year 2007 request builds upon the activities identified in fiscal year
2006. In fiscal year 2006, total enacted funding for Pandemic
activities is approximately $24.8 million. Included in this number is
the fiscal year 2006 $20 million supplemental increase and
approximately $4.8 million in base spending. The $20 million
supplemental was received at the end of the first quarter of fiscal
year 2006 and the funds were available on January 26, 2006.
The fiscal year 2007 total funding request for Pandemic
Preparedness request is approximately $55.3 million and includes the
$24.8 million from the fiscal year 2006 that includes the emergency
supplemental appropriation and a requested increase of $30.5 million
over the fiscal year 2006 enacted level for pandemic influenza. We
would be happy to provide the activities covered under the fiscal year
2006 supplemental request.
[The information follows:]
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
GENERIC DRUGS USER FEES/CITIZEN PETITIONS
Question. I understand that FDA believes it is time to implement a
user fee program for generics. The generic drug industry has several
criticisms of this idea. One is that they will still face many
regulatory issues after their drug is approved. Another is that their
budget has been chronically under funded--especially in relation to
dollars spent approving new drugs, even without including user fee
money.
How would you respond to these criticisms?
Answer. First, FDA has made significant investments to improve the
generic drug review process with the funds appropriated by Congress.
These investments have helped lower the median review time by 2 months.
FDA has not made any decisions concerning a user fee program for
generics. Given the existence of user fee programs for other product
reviews, there have been suggestions that the idea may need to be
explored, but these suggestions are general comments. There is no
commitment to propose generic user fees and no formal Administration
proposal for a generic user fee program. If a proposal is considered,
we will certainly consider the concerns and criticisms about the
proposal from the generic industry. We continue to work with the
generic industry to address their current concerns with the Office of
Generic Drugs.
Question. Have you begun working on legislation?
Answer. FDA has not made any decisions concerning a user fee
program for generics, nor has the Agency begun work on legislation to
enact such a program. Given the existence of user fee programs for
other product reviews, there have been suggestions that the idea may
need to be explored, but these suggestions are general comments. There
is no commitment to propose generic user fees and no formal
Administration proposal for a generic user fee program. If a proposal
is considered, we will certainly consider the concerns and criticisms
about the proposal from the generic industry. We continue to work with
the generic industry to address their current concerns with the Office
of Generic Drugs.
Question. It has been reported that one cause of unnecessary delays
in getting generic drugs on the market are certain citizen petitions. I
am aware that FDA is working on a study to figure out what the actual
effects of these citizen petitions are. In last year's Senate report,
we asked for an update on this study--including any changes FDA plans
to make in the process. I understand that this report is still in your
clearance process, but can you give us a preview of what we might be
provided?
Answer. The Senate report is currently undergoing final clearance,
but I would be happy to provide you with an overview of how FDA is
addressing potential improvements to the citizen petition process. In
response to the significant increase in the number of citizen petitions
submitted to FDA's Center for Drug Evaluation and Research, CDER, and
an increasing backlog of pending petitions, the Center's Office of
Regulatory Programs or ORP, initiated an extensive review of CDER's
processes for responding to citizen petitions.
The Office of Generic Drugs has made organizational changes
designed to improve the citizen petition response process. The office
has dedicated a specific group of scientists who will be responsible
for addressing citizen petition responses. This organizational change
is expected to increase the consistency, quality, and speed of the
Office of Generic Drug's input on citizen petition responses.
ORP is currently undertaking an initial review of its citizen
petition process improvement efforts. Although FDA has been
implementing changes to its process for less than a year, the agency is
trying to gather some early data to evaluate whether these new
processes have been helpful and to examine whether additional
improvements might be beneficial. The review and response to citizen
petitions, however, requires careful and painstaking research, precise
writing and editing, and thorough legal review to produce a document
that is a clear representation of FDA's scientific and legal opinion of
what are often very complex issues. This process requires input from
many agency components.
In addition, ORP, the Office of Generic Drugs, and the Office of
Chief Counsel plan to review blocking petitions that have been denied
to consider such factors as the timing of the petition and the nature
and age of the data upon which the petition was based. In some cases,
individuals submitted petitions that were very close to the date of
patent or exclusivity expiration were based on information that was
readily available well before the petitions were submitted. Where we
believe that further investigations may be warranted, the agency is
considering the option to refer the cases to the Federal Trade
Commission.
I would be happy to provide for the record a timeline for our
recent activities related to improvements to the citizen petition
process.
[The information follows:]
Timeline for Improvements to Citizen Petition Process
Fall of 2004.--ORP convened a process improvement team comprising
representatives from ORP, the Office of New Drugs, and the Office of
Generic Drugs and consulted with other offices involved in the petition
process, such as the Office of Chief Counsel, to discuss improvements
to the petition process.
October 2004 to May 2005.--The process improvement group generally
met on a biweekly basis; sometimes more frequently. The group began by
describing the existing process in detail and then looked for areas
where FDA could make improvements and achieve efficiency.
June 2005.--ORP finalized new procedures to improve the citizen
petition process and began full implementation of process improvements.
ORP instituted some of these improvements while the meetings to
identify improvements were ongoing.
May and June 2005.--ORP presented process improvement efforts to
senior management within CDER and various groups involved in working on
citizen petition responses.
Currently.--ORP is documenting its new procedures in a Manual of
Policies and Procedures, also known as MAPP.
GENERIC DRUG APPROVAL
Question. I appreciate your response to my letter of February 6th,
regarding generic drugs and the FDA strategic redeployment. However,
there were some questions that were not answered.
What additional staffing and funding would be required to decrease
the backlog of generic drug applications by 1/3 over the next fiscal
year?
Answer. FDA understands that Congress and the public are concerned
about the high cost of prescription drug products. Generic drugs play
an important role in granting access to products that will benefit the
health of consumers and the government. Prompt approval of generic drug
product applications, also known as abbreviated new drug applications,
or ANDAs, is imperative to making generic products available to
American consumers at the earliest possible date. This has been a high
priority for FDA.
FDA believes that making improvements in the process for the review
of generic drug applications offers the best promise for reducing ANDA
review time. Total spending on the Generic Drug Program is $64.6
million, which is more than a 66 percent increase from the comparable
fiscal year 2001 amount, and has helped lower the median review time.
In addition, FDA believes that making improvements in the process for
the review of generic drug applications offers the best promise for
reducing ANDA review time. With this goal in mind, in fiscal year 2005,
FDA's Office of Generic Drugs, or OGD, focused on streamlining efforts
to improve the efficiency of the ANDA review process. OGD added
chemistry and bioequivalence review teams and has taken steps to
decrease the likelihood that applications will face multiple review
cycles. OGD also instituted revisions to the review process such as
early review of the drug master file as innovator patent and
exclusivity periods come to an end, cluster reviews of multiple
applications, and the early review of drug dissolution data.
In fiscal year 2006, we will build on these process improvements.
We have begun a major initiative to implement Question-based Review for
assessment of chemistry, manufacturing, and controls data in ANDAs.
This improvement builds on the Quality-by design and risk-based review
initiatives of FDA's Center for Drug Evaluation and Research. This
mechanism of assessment is consistent with the International Conference
on Harmonization Common Technical Document and will enhance the quality
of evaluation, accelerate the approval of generic drug applications,
and reduce the need for supplemental applications for manufacturing
changes.
FDA's OGD will continue institute efficiencies in the review
process to accelerate the review and approval of ANDAs. FDA will also
continue to work very closely with the generic manufacturers and the
generic drug trade association to educate the industry on how to submit
applications that can be reviewed more efficiently and that take
advantage of electronic efficiencies that speed application review. We
will also work with new foreign firms entering the generic drug
industry. The agency recognizes that it will take time for these new
firms to understand the requirements for generic drug products. In the
long term, however, these efforts should shorten overall approval time
and increase the number of ANDAs approved during the first cycle of
review. In fiscal year 2006, FDA plans to spend $62.8 million relating
to generic drugs and, specifically, $28.3 million in OGD. In fiscal
year 2007, FDA plans to spend $64.6 million relating to generic drugs
and $29 million in OGD.
Question. What additional staffing and funding is required to
decrease the length of time it takes to approve a generic drug
application by 25 percent?
Answer. FDA recognizes that generic drugs play an important role in
granting access to products that will benefit the health of consumers
and the government. The total spending on the Generic Drugs Program is
$64.6 million, which is more than a 66 percent increase from the
comparable fiscal year 2001 amount. This has helped lower median drug
review time by 2 months. FDA believes that making improvements in the
process for the review of generic drug applications offers the best
promise for reducing Abbreviated New Drug Application, also known as
ANDA, review time. With this goal in mind, in fiscal year 2005, FDA's
Office of Generic Drugs, or OGD, focused on streamlining efforts to
improve the efficiency of the ANDA review process. In fiscal year 2006,
we will build on these process improvements, including efforts to
implement Question-based Review. FDA's OGD will continue institute
efficiencies in the review process to accelerate the review and
approval of ANDAs. FDA will also continue to work to educate the
industry on how to submit applications that can be reviewed more
efficiently. We will also work with new foreign firms entering the
generic drug industry. The agency recognizes that it will take time for
these new firms to understand the requirements for generic drug
products. In the long term, however, these efforts should shorten
overall approval time and increase the number of ANDAs approved during
the first cycle of review.
Question. Please provide the number of new drug applications that
have been submitted and approved in each of the last 5 years, including
the average timeframe for approval. How does this number compare with
the number of generic drugs that have been submitted and approved?
Answer. I would be happy to provide that information for the
record.
[The information follows:]
The following two tables provide a 5-year summary of approval
statistics for new drugs. Please note: The submissions approved in a
particular fiscal year are not necessarily filed in that fiscal year.
APPROVAL TIMES FOR PRIORITY AND STANDARD NEW DRUG AND BIOLOGIC APPROVALS, NDAS/BLAS FISCAL YEARS 2001 TO 2005--APPROVAL TIMES IN MONTHS
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Priority Standard
-------------------------------------------------------------------------------------------------------------------------------
Fiscal year Submissions Number Mean Approval Median Submissions Number Mean Approval Median
Filed Approved Time Approval Time Filed Approved Time Approval Time
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2001............................................................ 10 10 7.9 6.0 86 61 17.8 15.0
2002............................................................ 12 10 14.3 13.0 84 54 19.4 14.8
2003............................................................ 19 14 18.2 6.0 82 72 21.9 13.3
2004 \1\........................................................ 28 19 13.8 9.0 94 74 19.7 12.7
2005 \1\........................................................ 32 27 10.1 6.0 71 82 20.6 12.9
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Beginning in fiscal year 2004, CDER figures include BLAs for therapeutic biologic products which were transferred from CBER to CDER.
APPROVAL TIMES FOR PRIORITY AND STANDARD NEW MOLECULAR ENTITIES, NMES AND NEW BIOLOGICS FISCAL YEARS 2001 TO 2005--APPROVAL TIMES IN MONTHS
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Priority NMEs/New Biologics \1\ Standard NMEs/New Biologics \1\
-------------------------------------------------------------------------------------------------------------------------------
Fiscal Year Number Mean Approval Median Number Mean Approval Median
Number Filed Approved Time Approval Time Number Filed Approved Time Approval Time
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2001............................................................ 8 5 8.5 6.0 24 10 24.7 21.9
2002............................................................ 8 8 13.7 13.0 14 14 16.4 12.5
2003............................................................ 12 8 9.0 6.0 17 13 21.6 22.8
\1\ 2004........................................................ 18 13 12.7 6.0 15 14 22.8 19.3
\1\ 2005........................................................ 18 17 12.4 6.0 14 10 25.5 23.9
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Beginning in fiscal year 2004, CDER figures include BLAs for therapeutic biologic products which were transferred from CBER to CDER.
The following table provides information regarding generic drug
approvals
APPROVAL TIMES FOR GENERIC DRUG FISCAL YEARS 2001 TO 2005--APPROVAL TIMES IN MONTHS
----------------------------------------------------------------------------------------------------------------
Receipts of Number of Mean Approval Median
Fiscal Year Original ANDAs Approvals Time Approval Time
----------------------------------------------------------------------------------------------------------------
2001............................................ 307 241 20.9 18.4
2002............................................ 361 296 21.4 18.3
2003............................................ 449 284 20.7 17.3
2004............................................ 563 320 20.5 16.3
2005............................................ 766 361 19.5 16.3
----------------------------------------------------------------------------------------------------------------
Question. What total funding has been spent annually on approval of
new drugs for the past 5 years? Please list appropriated funding and
user fees separately.
Answer. I would be happy to provide the amount spent annually on
the approval of new drugs in the past 5 years for the record.
[The information follows:]
FUNDING TOTALS FOR NEW DRUGS
------------------------------------------------------------------------
Amount
------------------------------------------------------------------------
Fiscal year 2001:
Appropriated Funding................................ $76,000,000
User Fees........................................... 47,500,000
---------------
Total............................................. 123,500,000
===============
Fiscal year 2002:
Appropriated Funding................................ 70,000,000
User Fees........................................... 49,300,000
---------------
Total............................................. 119,300,000
===============
Fiscal year 2003:
Appropriated Funding................................ 75,000,000
User Fees........................................... 56,500,000
---------------
Total............................................. 131,500,000
===============
Fiscal year 2004:
Appropriated Funding................................ 72,000,000
User Fees........................................... 76,900,000
---------------
Total............................................. 148,900,000
===============
Fiscal year 2005:
Appropriated Funding................................ 75,200,000
User Fees........................................... 83,400,000
---------------
Total............................................. 158,600,000
------------------------------------------------------------------------
DRUG ADVERTISING
Question. I understand that FDA issued approximately 15 warning
letters to drug companies regarding advertisements in 2005, an increase
from the past several years. As we all know, though, the number of
drugs ads has also increased. I am pleased that drug companies have
published guidelines for their ads, and appear to be working with the
FDA to try to ensure that ads are more responsible and presented
fairly. I believe FDA is working on guidance to be published this year
to assist drug companies in that effort.
Can you give us an update on FDA's activities relating to drug ads?
Is it still FDA's position that companies should not be required to
submit ads to FDA prior to their publication?
Answer. On November 1 and 2, 2005, the FDA held a two-day public
hearing to provide an opportunity for broad public participation and
comment on direct-to-consumer, also known as DTC, promotion of
regulated medical products, including prescription drugs for humans and
animals, vaccines, blood products, and medical devices. FDA is in the
process of developing additional guidance for industry. Our major
effort is a draft guidance to address the presentation of risk
information in prescription drug and medical device promotion. Another
effort is to finalize the draft guidance on the brief summary of risk
information for the page adjacent to direct-to-consumer print
advertisements for prescription drugs. FDA will conduct a series of
three studies to examine the format and content of brief summaries in
direct-to-consumer print advertisements to assist the agency in
finalizing this draft guidance. FDA is also working to finalize the
draft guidance on criteria FDA uses to distinguish between disease
awareness communications and promotional materials, to encourage
manufacturers to disseminate educational messages to the public, and
the guidance on the manner in which restricted device firms can comply
with the rules for disclosure of risk information in consumer-directed
broadcast advertising for their products. FDA has created a Promotion
Steering Committee to leverage policy development for prescription drug
promotion, including DTC promotion. The committee consists of
representatives from the Office of the Commissioner, Office of Chief
Counsel, and each center responsible for medical products. The
committee meets to determine how to best allocate our limited resources
for policy development.
Under current law and regulations, FDA cannot require companies to
submit promotion materials prior to use. In addition, there are tens of
thousands of promotional pieces per year, prior review, even if
authorized, would be a major challenge.
Question. If legislation were enacted calling for prior approval of
prescription drug ads before airing, would your agency have adequate
personnel and resources to meet this mandate? Could you provide us more
information on this?
Answer. The Administration has not established a position on the
legislative proposal you describe. The Center for Drug Evaluation and
Research receives over 54,000 pieces per year, of which 9,000 are
direct-to-consumer, or DTC. Of the 9,000 pieces of DTC final materials,
only 467 are sent in as proposals. Providing timely review of these
promotional material would represent a tremendous increase in workload
and FDA could not conduct timely reviews of these promotional material
with the resources available.
FDA feels that it is highly valuable to the public for us to review
and provide advice to manufacturers about broadcast advertisements
while they are being produced. Therefore, we have made that one of our
highest priorities. This helps ensure DTC compliance and reduces the
number of advertisements that might otherwise violate the Food, Drug &
Cosmetic Act from appearing in public.
FOOD DEFENSE
Question. Dr. Von Eschenbach, the past several years have seen huge
increases for ``food defense'': $20.5 million in fiscal year 2004,
$35.5 million in fiscal year 2005, $10 million in fiscal year 2006, and
the budget this year proposes an increase of nearly $20 million.
In your written statement, you spend just under two pages
discussing what this money will buy. FERN Labs, eLexnet systems, and
Emergency Operations Networks all sound, and I'm sure in fact are, very
important, but this is a lot of money, and I think we should spend a
little more time focusing on it--especially if these increases are
coming at the expense of other activities.
Can you walk us through a scenario that illustrates how this money
will be used, in a practical way, to prevent or contain an outbreak
involving contaminated food of drugs? How are we safer now that all of
this money has been spent?
Answer. In one such scenario, a truck driver for a food
manufacturing plant introduces a biological, chemical, or radiological
agent into truck loads of a byproduct en route between the food
manufacturing plant and one of several plants that converts the
byproduct into a usable food ingredient. The food ingredient is
distributed nationwide as well as overseas. The ingredient is used in
the manufacture of a variety of seemingly unrelated food items. Many of
these food items are themselves used as ingredients in other foods.
Consequently, contaminated ingredients from several plants would end up
in a large number of foods, under a variety of brand names, with
national distribution.
Food Emergency Response Network, or FERN, laboratory testing in the
scenario listed above would likely include finished product testing of
foods implicated in human illness; and, food of the same lots as those
implicated in human illness at various points in the production and
distribution systems totaling approximately 100,000 samples for
analysis. To fully recover from this scenario or from a terrorist
attack or national emergency, FDA would need to conduct recalls,
seizures, and/or disposal of contaminated food which would then restore
confidence in the Nations food supply.
Food Defense funding supports FDA's five key areas of awareness,
prevention, preparedness, response, and recovery. FDA strives to
increase awareness of the role of food as a vehicle for terrorism,
various illnesses, and symptoms that are caused by foodborne threat
agents; and, by educating and coordinating the dissemination of
information to State and local partners, relevant associations, and
industry. With Food Defense funding, FDA is able to conduct
surveillance, inspectional and sampling programs to monitor
manufacturers and their products for the presence of threat agents
where such an intentional tampering may be found prior to full human
consumption. FDA studies food prevention technologies to improve the
safety of food and establish guidelines and or performance standards
for industry which might prevent the contamination altogether. FDA has
worked on method validation and matrix extension to strengthen the
Nation's food testing laboratory capability in order to be prepared to
quickly detect threat agents in the food supply. In addition, the FERN
provide response capabilities by rapidly testing large numbers of
samples of food. The Emergency Operations Network, or EON, is an
enhanced communication system that provides seamless information access
to all FDA offices, enabling them to respond quickly to the full range
of FDA emergencies.
Question. With regard to the technology we are buying and labs we
are outfitting- are they flexible? Can they be used for other
activities when there are no emergencies? How do they complement or
duplicate similar USDA labs?
Answer. Many of the agents we are concerned about in food defense
are also of food safety concern. Therefore, the equipment is useful for
our routine food safety surveillance programs as well as food defense
activities. The state Food Emergency Response Network, or FERN,
Chemistry laboratories that were awarded FDA FERN chemistry Cooperative
Agreements in fiscal year 2005 are utilizing the equipment and
resources provided by FDA to increase capability of FERN analytical
methods and for surveillance of the food supply. Currently, these
laboratories are actively engaged in increasing the number of analytes
and food commodities that the current FERN Chemistry methods can
detect. This method validation work not only increases the capabilities
of the Cooperative Agreement laboratories but also increases the
capabilities of the entire FERN Network when the expanded methods are
shared with all FERN Chemistry laboratories.
In addition, the Cooperative Agreement laboratories are involved in
the surveillance of the food supply through ad hoc analysis of food
commodities for Food Defense analytes. These surveillance analyses are
based on vulnerability and risk assessments. This surveillance sampling
provides a wider food shield and an opportunity to demonstrate and
assess the capabilities, capacity, and communication within the FERN.
Cooperative Agreement laboratories also analyze proficiency test
samples throughout the year to demonstrate their continuing capability
to analyze particular food commodities for identified analytes. These
proficiency test samples build confidence in each laboratory's ability
to find threat agents in a variety of food commodities, were there to
be terrorist attack or a national emergency.
To avoid duplication, FDA has taken the lead in funding both
Chemistry and Radiological FERN laboratories to build capability and
capacity for these disciplines across the Nation, whereas United States
Department of Agriculture, or USDA, is responsible for funding the
Microbiological laboratories. Therefore, our coordinated efforts are
complementary to FDA's overall FERN program.
Question. Do you anticipate a time we won't have to provide huge
increases every year for these activities--when will we simply be able
to maintain our safeguards?
Answer. Thank you for the opportunity to address FDA's efforts to
safeguard the food supply from attack. FDA regulates $240 billion worth
of domestic food and $15 billion of imported food. The American food
industry contributes approximately 20 percent of the U.S. Gross
National Product, employs about 14 million individuals, and provides an
additional 4 million jobs in related industries. FDA's capacity to
defend the food supply from attack and to maintain consumer confidence
in our ability to do so has significant impacts on the public health
and the Nation's economy.
Our plan for food defense aligns with the mandate of Homeland
Security Presidential Directive-9, which establishes a national policy
to defend the food and agriculture system. Among the key food defense
projects funded to date is the Food Emergency Response Network, or
FERN. FERN establishes and expands a national laboratory network to
increase analytic surge capacity for biological, chemical and
radiological agents in food. Other key food defense projects include
targeted food defense research; targeted, risk-based inspections;
Biosurveillance, to improve coordination and integration of existing
food surveillance capabilities under the government-wide
Biosurveillance Initiative; and emergency Operations Network Incident
Management System, to upgrade and expand FDA's management and
coordination capabilities for responding to incidents affecting the
U.S. food supply.
FDA conducts these activities in the context of an ever-increasing
volume of imported foods and the growing complexity of the food
industry and of the technologies used in food production and packaging.
This transformation will continue to present fresh challenges for FDA
and for the plans and strategies we use to defend the food supply from
attack. We will direct any food defense funding provided in fiscal year
2007 to address these new challenges, to build upon past successes, and
to strengthen our capabilities to address terrorist threats to the food
supply.
Although the Administration has not formulated a budget for fiscal
year 2008 and later years, the long-term recommendation for the FERN
program is for FDA to achieve a total of 50 state laboratories. With
the funding in our fiscal year 2007 budget, we estimate that we will
increase the number of operational facilities to 16 laboratories. You
are correct in pointing out that we will not need budget increases to
expand the number of FERN laboratories once we establish all of these
labs. However, there may still be an annual need for resources to
maintain and support FERN labs.
UNIFORM FOOD SAFETY
Question. Does FDA support the National Uniformity for Food Act as
passed recently in the House of Representatives? Please explain why or
why not.
Answer. The Administration has not taken a position on this
legislation.
POST-MARKETING STUDIES
Question. What activities, if any, is FDA undertaking in order to
decrease the number of post-marketing studies that have been pledged to
FDA but not yet undertaken? Does FDA see this as a problem? Why or why
not?
Answer. Postmarketing Study Commitments, also known as PMCs, for
approved drug products, including biological drugs, are studies that a
product sponsor either is required or agrees to conduct after FDA
approves a product for marketing to further define the safety,
efficacy, or optimal use of a product. FDA closely monitors the status
of PMCs to ensure that product sponsors initiate and complete the
studies in a timely manner. In some cases, the studies can take years
to complete, even if everything is on schedule. In other cases, there
are considerable obstacles, such as difficulty in recruiting patients
and investigators to participate in a clinical trial when an approved
therapy is available. Sponsors must resolve these issues before they
can complete the studies. When obstacles arise, FDA works closely with
sponsors to address these obstacles. Approximately 38 percent of the
currently pending PMCs for new drug applications were established in
applications approved between October 1, 2003 and September 30, 2005.
Depending on the complexity of the study, FDA would expect that many of
these studies would not have been initiated yet.
As of the Senate Hearing date, FDA had planned to undertake a
review of the decision-making process behind requests for PMCs but had
not formally issued a contract. On April 5, 2006, FDA awarded a
contract to an outside organization to conduct a thorough evaluation of
the postmarketing study commitment process for collecting medical
information. The contractor will examine in-depth the agency's internal
processes regarding PMCs and make recommendations regarding ways to
improve FDA's PMC processes and practices. The outside contractor will
evaluate how review divisions decide whether to request PMCs, how
divisions make decisions surrounding what kinds of PMCs to request, and
how divisions establish reasonable timeframes for completing PMCs. The
study will serve to assist FDA in determining whether industry needs
better guidance regarding PMCs and to ensure there is a standardization
of the procedures. In addition, the Centers within FDA also have
undertaken activities to improve the response on postmarketing and
post-approval studies.
FDA takes its statutory obligations under the Food and Drug
Administration Modernization Act of 1997 to track and monitor the
progress of PMCs very seriously. FDA recently published a final
guidance for industry to describe in greater detail the content,
format, and timing of PMC annual status reports submitted by the drug
industry. Furthermore, FDA reports annually in the Federal Register on
the performance of applicants in conducting their PMCs and maintains a
public Web site that contains the basic information that FDA committed
to make available to the public. These initiatives, along with other
FDA internal procedures, are all intended to ensure that industry
undertakes their commitments and completes them in a timely manner.
On January 1, 2005, the Center for Devices and Radiological Health,
also known as CDRH, initiated the use of the new Condition of Approval
Tracking System. As of that date, all postapproval studies are entered
into the system, along with the due dates of any agreed upon report
deliverables. CDRH monitors the system daily to see that sponsors are
honoring their commitments. Procedures are in place to notify the
sponsor immediately if deadlines are not met, and also to acknowledge
the receipt of reports that are on time and are reviewed. Under the new
system, all reports have been delivered on time.
CDRH is also developing the Postapproval Study Web site that will
be available to the public. This Web site will list the postapproval
studies being done, briefly describe the study, and document the status
of studies, as reported by industry.
FDA believes that changes to the Condition of Approval study
program will improve communication with industry about these studies
and increase collaboration in designing high quality studies with
targeted end points. The results of these studies will be important to
FDA, industry and the health care community. Acknowledgement of receipt
of study reports and follow-up on overdue reports will encourage
compliance. Finally, we believe the public Web site will prompt
industry to conduct the studies and report to FDA on time.
MICROBIOLOGICAL DATA PROGRAM
Question. The USDA is proposing to eliminate that Microbiological
Data Program, currently carried out by the Agricultural Marketing
Service. One reason offered for this proposal is that FDA currently
undertakes, or will continue, the work of this program. Reports of
increased food illnesses from fruits and vegetables appear to highlight
the importance of the Microbiological Data Program.
Has FDA worked with AMS in order to ensure that none of the
sampling currently carried out through the Microbiological Data Program
will be eliminated?
Answer. As a science-based agency, FDA collects data that can be
used to direct policy decisions, risk assessments, regulatory actions,
and other actions. In comparison, the Microbiological Data Program, or
MDP, program of the USDA Agricultural Marketing Service, also called
AMS, is a non-regulatory sampling survey. Because the MDP program is
not bound by the same regulatory requirements as FDA, it provides an
opportunity for collection of a much larger data set. However, the MDP
is not designed to provide the same source information, traceback, or
support for regulatory follow-up that are built into the FDA sampling
assignments. If a positive sample is found in an FDA produce sampling
assignment, follow-up action can be taken, while the design of the MDP
program does not allow for follow-up. Therefore, if AMS does eliminate
the MDP program, it would not produce a surveillance gap as FDA defines
this term.
Question. Is FDA already working on similar activities?
Answer. Since 1999, FDA has routinely issued sampling assignments
for selected commodities produced both domestically and abroad. The
purpose of FDA's produce sampling assignments is to gather information
on both the incidence of contamination and the practices and conditions
associated with contaminated produce and to take regulatory action, as
appropriate, when contaminated produce is found. The FDA sampling
assignments differ from the Agricultural Marketing Service's
Microbiological Data Program, also known as MDP, in important ways. FDA
samples are routinely collected at the farm gate or packinghouse for
domestic produce or at the border for imported produce. With domestic
samples, if contamination is present, it must have occurred at the farm
or packing facility. MDP samples are routinely collected at a later
stage of the supply chain, such as a distribution center, making it
more difficult to narrow down where contamination might have occurred.
The MDP program is a blind study. It does not collect information about
the samples that would allow traceback to the source; therefore, it
does not provide an opportunity to visit farms or packinghouses
associated with positive sample to gather information about practices
or conditions at those firms that may have led to contamination. FDA
samples are tested in FDA laboratories, while MDP samples are tested at
state laboratories. FDA data have a relatively well known performance
standard across the United States.
______
Questions Submitted by Senator Tom Harkin
AFLATOXIN
Question. Late last year, a pet food company based in South
Carolina initiated a recall of dog food that had been made with corn
contaminated with aflatoxin, produced by mold that sometimes develops
in crops under drought or other weather stress conditions. The death of
dozens of dogs has been attributed to consumption of this product both
before and after the recall was announced.
What steps has FDA taken to address this situation to ensure the
recall is fully and effective and completed?
Answer. FDA determined that this situation represented a serious
life-threatening health hazard to pet dogs and pet cats and classified
this recall as Class I. In a Class I Recall, FDA requests that the firm
conduct 100 percent effectiveness checks of their consignees to confirm
that they received notification about the recall and have taken
appropriate action. Additionally, our Atlanta district office issued
audit check assignments in coordination with the Center for Veterinary
Medicine to determine the effectiveness of the company's recall. The
vast majority of FDA audit checks are completed and show the recall of
dog food to be effective. FDA will monitor the disposal of all
recovered products. FDA will terminate this recall when disposition of
the recalled products is finalized.
Question. How can we assure the pet owners of this country that
this kind of event won't happen again?
Answer. As part of the investigation, FDA evaluated the company's
descriptions of the actions it has implemented at all of its plants to
ensure that an aflatoxin event does not happen again and found the
corrective actions acceptable. This situation generated much attention
and has served as a reminder to the pet food industry of the importance
of using appropriate manufacturing and quality control procedures.
BIOTERRORISM
Question. In December of 2004, the outgoing Secretary of Health and
Human Services Tommy Thompson stated ``I, for the life of me, cannot
understand why the terrorists have not attacked our food supply,
because it is so easy to do.'' The President's 2007 budget increases
funding for food defense to continue lab preparedness efforts and
expand State laboratories. However, it cuts funding for food import
inspections at ports of entry which a terrorist might use to smuggle
contaminated food products into the country. Since 1994, food imports
have grown five-fold to 6 million food import shipments annually, but
the FDA inspects less than 2 percent of these shipments.
Won't these proposed budget cuts for import inspection and testing
actually weaken FDA's ability to prevent an attack on the food supply
and make more likely the event that Secretary Thompson predicted?
Answer. For fiscal year 2007, FDA is requesting an increase of
$19.9 million in food defense to a total request of $178.2 million.
This is a 21,500 percent increase in funds from fiscal year 2001. The
funds requested would continue to improve laboratory preparedness and
food defense field operation, food defense research, surveillance, and
incident management capabilities. FDA uses a risk-based approach to
allocate resources. By focusing on risk through the cooperative work of
Customs and Border Protection, or CBP, FDA's Prior Notice Center, and
FDA field examinations, we will work smarter to target higher risk
products, manufacturers, and importers to ensure the safety of the
public health, protect the Nation's food supply and prevent an attack
on the Nation's food supply.
For example, currently, working with information submitted through
CBP's electronic systems used for import entries or through FDA's
internet-based Prior Notice System Interface, FDA screens shipments
electronically before they arrive in the United States to determine if
the shipments meets identified criteria for physical examination or
sampling and analysis or warrants other review by FDA personnel. This
electronic screening allows FDA to better determine how to deploy our
limited physical inspection resources at the border on what appear to
be higher-risk food shipments while allowing lower-risk shipments to be
processed in accordance with traditional import procedures after the
electronic screening.
Question. Instead of cutting border inspection, shouldn't the Bush
administration apply more resources to food import inspections to
bolster our defenses against bioterrorism?
Answer. Through smart allocation of FDA resources, fine tuning
FDA's risk based approach, and smarter screening criteria, the FDA will
be able to continue ensuring a safe food supply and protecting the
pubic health despite cuts in border inspections, which will allow
funding to other higher risk food defense and lab preparedness areas.
SUNSCREEN
Question. Skin cancer is on the rise in the United States. A
significant contributor is exposure to UVA rays. FDA has been
developing a monograph for sunscreens since 1978 to address the
critical issue of UVA rays but has not, thus far, issued it. As part of
the Fiscal year 2006 Agriculture Appropriations Act, FDA was asked to
issue a ``comprehensive final monograph for over-the-counter sunscreen
products, including UVA and UVB labeling requirements within 6 months
of enactment.''
What is the status of the monograph?
Answer. We are currently working on a rulemaking for OTC sunscreen
drug products to address both UVA and UVB labeling requirements.
Question. Will the monograph be issued by May 10th, the date the
fiscal year 2006 Act requires?
Answer. We are working to publish the document for this rulemaking
in the Federal Register.
GENERIC DRUGS
Question. Generic drugs help to make health care more affordable.
Currently, FDA has a backlog of 850 applications for generic drugs--
there are expected to be more over the next several years. Yet, the
President's budget flat funds the Office of Generic Drugs. In your
testimony before the Committee, you stated that generics were reviewed
in priority order, meaning that new generics for branded drugs without
a generic counterpart would be bumped to the front of the line.
However, more price competition between generics is also a valuable way
to decrease the price consumers pay for drugs. Therefore, I believe
prioritization is not, in and of itself, a sufficient solution to the
problem. In addition, approval delays effectively extend the patent
life of branded drugs despite Congress' clear intention otherwise. FDA
has increased its generic drugs Full Time Evaluators (FTEs) from 134 in
2001 to 201 in 206. Despite the increase, I am concerned FDA is not
devoting enough personal and resources to generic drugs given the
current workload and the future increase.
How many FTEs would be required to eliminate the current backlog
within the next year?
Answer. FDA understands that Congress and the public are concerned
about the high cost of prescription drug products. Generic drugs play
an important role in granting access to products that will benefit the
health of consumers and the government. Prompt approval of generic drug
product applications, also known as abbreviated new drug applications,
or ANDAs, is imperative to making generic products available to
American consumers at the earliest possible date. This is a key
priority for FDA. Since 2001, FDA has increased spending on the Generic
Drugs Program to $64.6 million for fiscal year 2007, which is more than
a 66 percent increase from the comparable fiscal year 2001 amount. This
has allowed FDA to reduce median review time by 2 months.
FDA believes that making improvements in the process for the review
of generic drug applications offers the best promise for reducing ANDA
review time. With this goal in mind, in fiscal year 2005, FDA's Office
of Generic Drugs, or OGD, focused on streamlining efforts to improve
the efficiency of the ANDA review process. OGD added chemistry and
bioequivalence review teams and has taken steps to decrease the
likelihood that applications will face multiple review cycles. OGD also
instituted revisions to the review process such as early review of the
drug master file as innovator patent and exclusivity periods come to an
end, cluster reviews of multiple applications, and the early review of
drug dissolution data.
In fiscal year 2006, we will build on these process improvements.
We have begun a major initiative to implement Question-based Review for
assessment of chemistry, manufacturing, and controls data in ANDAs.
This improvement builds on the Quality-by design and risk-based review
initiatives of FDA's Center for Drug Evaluation and Research. This
mechanism of assessment is consistent with the International Conference
on Harmonization Common Technical Document and will enhance the quality
of evaluation, accelerate the approval of generic drug applications,
and reduce the need for supplemental applications for manufacturing
changes. FDA believes that these process improvements will work to make
more generic drugs available to the public.
FDA's OGD will continue institute efficiencies in the review
process to accelerate the review and approval of ANDAs. FDA will also
continue to work very closely with the generic manufacturers and the
generic drug trade association to educate the industry on how to submit
applications that can be reviewed more efficiently and that take
advantage of electronic efficiencies that speed application review. We
will also work with new foreign firms entering the generic drug
industry. The agency recognizes that it will take time for these new
firms to understand the requirements for generic drug products. In the
long term, however, these efforts should shorten overall approval time
and increase the number of ANDAs approved during the first cycle of
review. In fiscal year 2006, FDA plans to spend $62.8 million relating
to generic drugs and, specifically, $28.3 million in OGD. In fiscal
year 2007, FDA plans to spend $64.6 million relating to generic drugs
and $29 million in OGD.
Question. How much would that cost?
Answer. FDA recognizes that generic drugs play an important role in
granting access to products that will benefit the health of consumers
and the government. FDA believes that making improvements in the
process for the review of generic drug applications offers the best
promise for reducing ANDA review time. With this goal in mind, in
fiscal year 2005, FDA's Office of Generic Drugs, or OGD, focused on
streamlining efforts to improve the efficiency of the ANDA review
process. In fiscal year 2006, we will build on these process
improvements, including efforts to implement Question-based Review.
FDA's OGD will continue institute efficiencies in the review process to
accelerate the review and approval of ANDAs. FDA will also continue to
work to educate the industry on how to submit applications that can be
reviewed more efficiently. We will also work with new foreign firms
entering the generic drug industry. The agency recognizes that it will
take time for these new firms to understand the requirements for
generic drug products. In the long term, however, these efforts should
shorten overall approval time and increase the number of ANDAs approved
during the first cycle of review.
Question. Does FDA estimate the number of future Abbreviated New
Drug Applications when making decisions to allocate resources to hiring
and training FTEs?
Answer. FDA attempts to project application numbers by ongoing
tracking of receipts and by looking at the products that will be going
off patent as well as other industry forecasts of trends. FDA also
ensures that it can meet the specified budget earmark for the generic
drug review program.
EARLY FOOD SAFETY EVALUATION
Question. I understand your agency is nearing publication of its
final Early Food Safety Evaluation, (EFSE) guidelines. I'm happy to
hear that as it is an important issue for American agriculture and I
look forward to its release.
Can you offer us more specifics on when we can expect to see final
publication?
Answer. We are moving to complete the last steps necessary to
finalize the guidance. For example, we are currently nearing completion
of the requirements of the Paperwork Reduction Act of 1995. The comment
period for the Notice for the agency information collection activities
recently closed on March 13, 2006. We expect publication soon after
completion of these final steps.
FOOD IMPORTS
Question. More than 80 percent of the seafood and an estimated 20
percent of fresh produce that Americans consume is imported.
Increasingly, imported foods are the source of food-borne illness. For
example, in 2003, a hepatitis A outbreak associated with green onions
imported from Mexico sickened over 550 people, killing at least 3.
There are many other examples of contaminated food that caused large
scale outbreaks and fatalities in the last 10 years.
How do you intend to improve FDA's oversight of imported food?
Answer. FDA will continue to implement the Public Health Security
and Bioterrorism Preparedness and Response Act of 2002, which provides
FDA with authorities aimed at enhancing the security of imported foods.
For example, the requirement for domestic and foreign facilities to
register with FDA will help FDA quickly identify, locate, and notify
the facilities that may be affected in the event of a potential or
actual terrorist incident or outbreak of foodborne illness. The advance
information about imported food shipments, provided under the prior
notice requirement, enables FDA, working closely with Customs and
Border Protection, or CBP, to more effectively target inspections of
food at the border at the time of arrival to ensure the safety and
security of imported food. This advance notice not only allows FDA's
and CBP's electronic screening systems to review and screen the
shipments for potential serious threats to health, intentional or
otherwise, before food arrives in the United States, but it also allows
FDA staff to review prior notice submissions for those products flagged
by the systems as presenting the most significant risk and determine
whether the shipment should be held for further investigation.
For fiscal year 2007, FDA is requesting an increase of $19.9
million in food defense to a total of $178.2 million. This is a 21,500
percent increase in funds from fiscal year 2001. The funds requested
would continue to improve laboratory preparedness and food defense
field operation, food defense research, surveillance, and incident
management capabilities.
FDA has worked to develop an automated risk-based import entry
examination system. This system is designed to assess risk in
individual import shipments. The system will combine expert knowledge,
open source intelligence and advanced self-learning algorithms to
dynamically assess entry-line level risk. In 2005, the first of a
series of research and analysis papers on this system provided timely
and relevant information to serve as the basis for exogenous-source
rules development for risk-based import examination. The goal in the
project is to provide early identification and assessment of events,
conditions, and situations in the world that could have an impact on
the safety or security of FDA-regulated imports. The project is
currently focused on imported seafood.
Question. How much would it cost to increase food import
inspections from 2 percent to 5 percent or 10 percent?
Answer. During fiscal year 2005, the Field conducted approximately
85,000 Import Food Field Exams/Tests; analyzed approximately 25,550
food import lab samples; and, made 8,672,168 Import Line Decisions.
Over 1.27 percent of food import lines were physically examined during
fiscal year 2005. In addition, critical steps in our counter terrorism
efforts are the Prior Notice Security Import Reviews. During fiscal
year 2005, the Field conducted 86,187 Prior Notice Security Import
Reviews in the foods area.
The mission of FDA's Prior Notice Center, or PNC, is to identify
imported food and feed products that may be intentionally contaminated
with biological, chemical or radiological agents, or which may pose
significant health risks to the American public, and intercept them
before they enter the United States. FDA will continue to focus
resources on Prior Notice Import Security Reviews of products that pose
the highest potential bioterrorism risks. The PNC uses a combination of
adaptable targeting strategies and weighted risk indicators in the
threat assessment process including contemporary intelligence involving
terrorist activities, a history of prior notice violations, and
compliance with admissibility standards as indicated by the results of
import field exams, filer evaluations, firm inspections, repeated prior
notice violations, and feedback from Field Investigators. By using a
risk based approach, the Prior Notice Center can intercept potentially
hazardous products before they enter the United States.
The benefit of these reviews comes from the quality and targeting
of review activities; not from the volume of imports inspected. Thus,
the quality of import screening is a better measure of FDA's import
strategy rather than simply focusing on the items physically examined.
Question. Could FDA improve its oversight of imports if it had
inspectors checking farms and factories in the country where our food
originates?
Answer. FDA continues to enhance our risk based approach to target
higher risk products, manufacturers, and importers with available
resources. FDA-conducted foreign inspections are an important aspect of
this multifold approach. It is important to understand, however, that
this is only one component of our approach. We also use previous
examination and laboratory sampling results, compliance information
received from other domestic and foreign regulatory agencies,
examination at the ports of entry, and general risk factors posed by
the products in question to provide controls of the safety of import
food commodities. FDA also focuses on risk by working cooperatively
with Customs and Border Protection and through the FDA's 24/7 Prior
Notice Center in counter- and bioterrorism targeting and evaluation of
supply chain integrity.
Although foreign inspections and border operations provide some
assurance that imported foods are safe, the agency continues to work to
foster international agreements and harmonize regulatory systems. For
example, we actively participate in the Canada/United States/Mexico
Compliance Information Group, which shares information on regulatory
systems and the regulatory compliance status of international firms to
protect and promote human health. In addition, FDA is heavily involved
in the Codex Alimentarius Commission Committees, which develop Codes of
Practice and standards to harmonize international food safety
practices.
FOOD RECALL
Question. The Food and Drug Administration (FDA) does not have
mandatory authority to recall contaminated food products and instead
relies on voluntary cooperation by food companies to get contaminated
food out of supermarkets, restaurants, and consumers' homes. In a
recent GAO study, FDA identified over 3,000 recalls of non-meat and
poultry foods from 1986 to 1999 and GAO identified nine instances
during that time where companies delayed or refused compliance with an
FDA recall request.
Should FDA have mandatory recall authority in order to protect
American consumers from contaminated food? Why or Why not?
Answer. The vast majority of food recalls are initiated voluntarily
by firms when a problem is discovered, often after the product has
entered the marketplace. It is the responsibility of the recalling firm
to account for product remaining under its direct control, to quickly
notify direct consignees of the identity of the product and any
potential hazard that it presents, and to request subrecalls where
indicated. FDA monitors recalls and either discusses follow-up actions
with the firm if it appears that the recall is not effective, or if
necessary, takes direct action to complement actions taken by the firm.
FDA encourages firms to conduct recalls that are effective and may take
enforcement action to remove products from the market if a firm is
unable or unwilling to do so.
When the hazard is significant, FDA expects that firms will
initiate a public notification process to make the public aware of the
problem and to recommend steps to be taken in order to prevent injury
or illness. Recall notifications provide the corrective action
necessary and a means for returning and/or reporting the status of the
recalled product.
In the event that public notice is not provided or is not
sufficient, FDA has and will continue to notify the public of the
hazard.
Question. If a terrorist attack against the food supply occurred,
how would FDA ensure the food was removed from the distribution chain,
supermarket shelves, and people's homes?
Answer. The Public Health Security and Bioterrorism Preparedness
and Response Act of 2002 includes a number of provisions that give new
authority to FDA to take action to protect the food supply against the
threat of intentional or accidental contamination of the food supply.
If a terrorist attack on the food supply occurs, FDA would work with
State and local food safety officials to remove products from store
shelves and distribution channels. FDA would also work with the press
to alert the trade industry and consumers about the potential hazard
and would provide consumers with information on how and where to
dispose of contaminated foods. We would include information to
consumers on what they should do if they had been exposed to the
contaminated food.
To ensure efficiency if an emergency occurred, FDA continues to
take additional measures to improve the success of recalls. On November
3, 2003, FDA posted guidance to the industry on our website intended to
assist industry in handling all aspects of a product recall, including
all corrections and removals. We also continue to develop the Recall
Enterprise System, which, when completed, will post recalls on our
website in real time.
METHYLMERCURY
Question. FDA and EPA have issued a joint advisory warning pregnant
women and women planning a pregnancy to avoid swordfish, shark, some
types of tuna and king mackerel, since those fish accumulate large
quantities of methylmercury which can harm their unborn children.
Eating seafood is the leading cause of exposure to methylmercury, a
toxin that can cause neurological damage to the developing fetus and
young children.
Although the advisory is useful, some groups have complained that
it is complicated and hard-to-remember. The Center for Science in the
Public Interest recently recommended that all grocery stores and fish
retailers should post the warning at the counter where consumers
actually purchase the seafood.
Why doesn't FDA enforce the limit for methylmercury in seafood,
e.g. test and remove seafood from the market that exceeds the limit of
1 ppm?
Answer. Risk from methylmercury is generally understood to derive
from substantial exposure over time of many meals that include fish.
That is why we issued a consumer advisory on methylmercury directed
toward women of childbearing age and young children. We are conducting
surveys to determine how the public, including pregnant women and
health care providers, are reacting to the consumer advisory on
methylmercury and to other information they may be receiving from all
sources about seafood risks and benefits.
It is useful to note that data from the National Health and
Nutrition Examination Survey, operated by the Centers for Disease
Control and Prevention, that measures levels of methylmercury in U.S.
women of childbearing age and young children through 5 years of age
reveal that the overwhelming majority of both women of childbearing age
and young children are exposed to methylmercury at very low levels. The
next phase of our risk management process for methylmercury involves a
risk analysis that is examining the likelihood of adverse effects
through the range of exposures being experienced by U.S. consumers.
This project is also examining the likelihood of health and nutritional
benefits from eating fish at various levels of consumption.
Question. To make the advisory truly effective, why doesn't FDA
require point-of-purchase notices giving consumers detailed information
on which types of fish contain high levels of methylmercury at the fish
counter?
Answer. FDA, in conjunction with the Environmental Protection
Agency, or EPA, has implemented a cost-effective public education
campaign. This campaign is designed to inform high-risk consumers about
reducing their exposure to high levels of mercury, while emphasizing
the health benefits of consuming fish and shellfish. This has resulted
in raising awareness about methylmercury in seafood. We believe the
steps that have been taken are more appropriate and more effective than
using point-of-purchase signage to convey a complex consumer message.
The program uses health professionals and the media to inform high-risk
populations, including women who may become pregnant, pregnant women,
nursing mothers and the parents of young children, about mercury in
seafood. The goal is to inform these high-risk consumers that they
should avoid or restrict their consumption of certain kinds of fish,
while emphasizing the importance of fish and shellfish as part of a
healthy diet.
The public education campaign includes an extensive outreach effort
to over 9,000 print and electronic media outlets. FDA and EPA have also
distributed over four million brochures about the advisory on
methylmercury in fish and shellfish to members of over 50 organizations
of healthcare providers to women and children. The brochures have also
been given to all practicing pediatricians, obstetricians,
gynecologists, nurse practitioners, and nurse midwives throughout the
country for office distribution. And, finally, we distribute it through
exhibits at medical and public health professional organization
meetings. This information is also available on our Web site for use by
States, food facilities, health care professionals, and consumer
groups.
In August 2005, FDA launched an educational program entitled ``Food
Safety Moms-To-Be'' that builds upon several food safety messages and
includes information for use by health educators about the advisory on
methylmercury in fish and shellfish. More than 45,000 Educator
Toolkits, including an Educators Resource Guide, video, and DVD were
sent to health professionals who have direct contact with pregnant
women via pregnancy planning, prenatal and post-natal care, and
childbirth education classes.
FDA also established a Web site for pregnant women to obtain
information about foodborne safety. The Web site received more than
35,000 visitors in its first full month of September 2005, is available
in both English and Spanish, and has an ``email a friend'' feature that
allows users to share this information with others.
FOODNET
Question. The Foodborne Diseases Active Surveillance Network
(FoodNet) is the principle foodborne disease component of CDC's
Emerging Infections Program (EIP). It is a collaborative project of the
CDC, FDA, and USDA. Unlike the direct funding that comes from USDA
which has remained consistent, the funds from CDC and FDA are derived
from the larger Food Safety Initiative and are thus subject to being
reallocated. Over the last 5 years the program has experienced a 10
percent decrease in funding. Cuts to the FoodNet Program will have a
direct effect on our Nation's ability to identify and track foodborne
illness.
How have these cuts impacted our ability to identify and track
foodborne illness?
Answer. FDA has provided a consistent level of funding in support
of FoodNet over the years and has experienced no change in the
availability of information we need to direct and evaluate the
effectiveness of our regulatory programs. FDA will work with the
Committee if specific funding information is needed from CDC.
Question. Do you support giving direct line item funding to the
FoodNet Program?
Answer. While FDA believes that FoodNet is a valuable tool for
identifying and tracking foodborne illness, which allows the agency to
evaluate the effectiveness of its regulatory programs, FDA does not
support giving direct line item funding to the FoodNet program in the
FDA appropriation.
______
Questions Submitted by Senator Byron L. Dorgan
IMPORTED PRESCRIPTION DRUGS
Question. Given the substantial price differences between products
sold in the United States and abroad, it should come as no surprise
that millions of Americans already import prescription drugs.
How much did the FDA spend in fiscal year 2005 to prevent Americans
from importing prescription drugs from Canada and other countries?
Answer. FDA prevents unauthorized importation of drugs from other
countries through post-market import inspections and post-market import
laboratory analyses. In fiscal year 2005, the Office of Regulatory
Affairs spent $6.4 million on post-market import inspections and $1.7
million on post-market import laboratory analyses of human drug imports
from all countries. Post-market import inspections are defined as
physical inspections, product information, line entry & label review.
They include all the activities relating to the decision to permit or
refuse entry to regulated products. Examples include: import field
exams, import sample collections, Operational and Administrative System
for Import Support on-screen reviews, review of physical documents,
detention without physical examination, private laboratory report
review and audit activities, filer evaluation, and follow up to
refusals. Post-market import laboratory analyses are defined as sample
analysis, product testing, methods development for testing purposes,
specific regulatory problems that FDA develops solutions for. They
exclude applied research and premarket review analyses and include
fingerprinting.
Question. Much of the apparatus for assuring safe consumer access
to imported drugs is already in place. Under current law, drug
companies are free to manufacture prescription drugs in other countries
and import them for sale in the United States. More than $40 billion of
the prescription drugs consumed by Americans in 2002--one quarter of
all drugs--was made in other countries and imported to the United
States for sale by pharmaceutical manufacturers.
If importation can be deemed safe for manufacturers, why can't it
be made safe for consumers? Wouldn't a regulated system be safer than
what is occurring today?
Answer. 21 USC 381(d)(1) was included in the Federal Food, Drug,
and Cosmetic Act with the understanding that the manufacturer of a drug
product is in the best position to know if a drug product destined for
import into the United States is their genuine product, and not a
counterfeit, and whether it has been stored or handled in such a way as
to affect the integrity of the product. Because counterfeiters are so
sophisticated in their methods of copying drug products and packaging,
consumers, distributors, and retailers, are not in a position to easily
distinguish genuine from counterfeit drug product. Oftentimes, the
manufacturer must perform costly and complicated analysis to determine
if a product is genuine or not.
The HHS Drug Importation Task Force Report issued in December 2004
outlined the measures that would be needed to implement an importation
program that provides adequate safeguards and resources to ensure that
the imported drugs are safe and effective. A program that does not take
these measures into consideration, regulated or not, would perpetuate
the buyer beware situation that is currently occurring and consumers
would continue to put themselves at risk for harm by importing
unapproved drugs into the United States for personal use.
Specifically, the Task Force made a number of significant finding
about an importation program. The Task Force determined that first,
integrity of the distribution system must be ensured by, among other
measures, requiring drug pedigrees with adequate documentation,
limiting ports of entry and distribution channels, and allowing
commercial importation only from licensed foreign wholesalers to
authorized sellers in the United States. The program must exclude
personal shipments via the mail and courier services. Indeed,
regulating personal importation could be extraordinarily costly, on the
order of $3 billion a year based on estimates of the current volume.
Second, any program must limit importation to those prescription
drugs most likely to yield savings--namely high-volume products for
which a United States--approved generic is not available--and allow
importation only from countries for which we have a high degree of
confidence in the comparability of their drug regulatory systems. In
the Administration's view, Canada is the only country from which
importation should be considered at this point. Congress should also
exclude drugs or classes of drugs that pose increased safety risks in
the context of importation, such as controlled substances and drugs
that require refrigeration during shipping.
Third, any program must require that imported prescription drugs be
dispensed pursuant to a valid U.S. prescription pursuant to advice from
a trusted medical professional.
Fourth, measures must be included to ensure that any purchasers of
imported drugs are given full and adequate information regarding, among
other things, the source of the drugs, and that packaging and labels on
imported drugs meet all FDA requirements.
Fifth, any importation program must ensure effective oversight and
adequate government resources to protect American consumers.
Sixth, any program must include the ability to use streamlined
inspection procedures, and ensure appropriate remedial steps can be
taken in the event of adverse events from imported drugs.
Seventh, any program must avoid anti-competitive provisions such as
so-called ``forced sale'' provisions, and other types of price
controls.
The Task Force found that such a system would have minimal cost
savings.
Question. Congress has twice enacted legislation to allow for the
importation of prescription drugs. Both times provisions were included
that required the Secretary of Health and Human Services to certify
that imported drugs would be safe and would result in significant
savings for the American consumer. The Congressional Budget Office has
already determined that legalizing importation will reduce prescription
drug expenditures by $50 billion. CBO estimates Federal savings of $1.6
billion over the 2006-2010 period and $6.1 billion over the 2006-2015
period. That takes care of the savings argument.
In terms of safety, how do you guarantee the safety of drugs that
are sold in the United States? How did the FDA guarantee the safety of
Vioxx? Why is the bar set higher for imported drugs?
Answer. At FDA, the Center for Drug Evaluation and Research, or
CDER, is responsible for ensuring that America's drug product supply is
safe, effective, adequately available, and of the highest quality.
CDER's responsibility for ensuring drug safety is two fold, consisting
of premarket safety review and postmarket safety surveillance. We
evaluate the safety of a drug before it can be marketed in the United
States in a pre-market safety review. FDA grants approval to drugs
after a sponsor demonstrates that they are safe and effective for their
intended use. Since the full magnitude of some potential risks do not
always emerge during the mandatory clinical trials conducted before
approval to evaluate these products for safety and effectiveness, if
CDER approves a drug, we continue to monitor the safety of that drug
after it is on the market by collecting data about its use and watching
for signs of troubling or dangerous side effects. We call this post-
market safety surveillance.
No drug product is ``perfectly'' safe. Moreover, FDA approval of a
drug is not a ``guarantee'' that the drug is ``perfectly'' safe. All
approved drugs pose some level of risk since every drug that affects
the body will have some side effects. FDA considers both the benefits
and risks of all medications before approval and unless a new drug's
demonstrated benefit outweighs its known risk for an intended
population, FDA will not approve the drug. Medications needed to treat
very severe or life-threatening illnesses such as cancer treatments may
be approved with more serious side effects than other types of
medications. FDA makes sure the label or package insert accurately
describes the benefits and risks discovered in the clinical trials and
after marketing. With the help of a health-care provider, a patient
should decide if the benefits for the drug outweigh the risks.
The pre-market process for approving drug products begins with the
drug companies who must first test their products. CDER monitors their
clinical research to ensure that people who volunteer for studies are
protected and that the quality and integrity of scientific data are
maintained. CDER assembles a team of physicians, statisticians,
chemists, pharmacologists, and other scientists to review the company's
data and their proposed use for the drug. If the drug is effective and
we are convinced that it is safe for its intended use-- meaning that
its health benefits outweigh its risks, we approve it for marketing in
the United States CDER does not actually test the drug when we review
the company's data. By setting clear standards for the evidence FDA
needs to approve a drug, including evidence for demonstrating the
safety of the drug for its intended use, the Agency helps medical
researchers bring new drugs to American consumers more rapidly.
Once a drug is approved for sale in the United States, FDA monitors
the use of marketed drugs for unexpected health risks, either through
post-marketing clinical trials or through spontaneous voluntary
reporting of adverse events from patients, doctors, and nurses through
MedWatch system that are entered into the Adverse Event Reporting
System, or AERS. Our safety reviewers monitor the data in AERS looking
for indications of potential serious, unrecognized drug-associated
reactions. If new, unanticipated risks are detected after approval, we
take steps to inform the public and change how a drug is used or even
remove a drug from the market.
Following the process and fundamental principles just described,
FDA originally approved Vioxx in May 1999 for the reduction of signs
and symptoms of osteoarthritis, as well as for acute pain in adults and
for the treatment of primary dysmenorrhea. The original safety database
included approximately 5,000 patients on Vioxx and did not show an
increased risk of heart attack or stroke. A later study, VIGOR, which
stands for VIOXX GI Outcomes Research, was primarily designed to look
at the effects of Vioxx on GI effects such as stomach ulcers and
bleeding and was submitted to the FDA in June 2000. The study showed
that patients taking Vioxx had fewer stomach ulcers and bleeding than
patients taking naproxen, another NSAID, however, the study also showed
a greater number of heart attacks in patients taking Vioxx. The VIGOR
study was discussed at a February 2001 Arthritis Advisory Committee and
the new safety information regarding all that was known at the time
about the potential risk of cardiovascular effects with Vioxx from this
study was added to the labeling for Vioxx in April 2002. Merck then
began to conduct longer-term trials to obtain more data on other
potential indications of this product. All trials for chronic use were
designed to monitor carefully for cardiovascular safety. The serious
side effect risks for which Vioxx was ultimately withdrawn from the
market voluntarily by Merck were identified when Merck collected new
data from a trial called the APPROVe, which stands for Adenomatous
Polyp Prevention on VIOXX trial where Vioxx was compared to placebo.
The purpose of this new trial was to see if Vioxx 25 mg was effective
for a new indication--for preventing the recurrence of colon polyps.
This trial was stopped early because there was an increased risk for
serious cardiovascular events, such as heart attacks and strokes, first
observed after 18 months of continuous treatment with Vioxx compared
with placebo.
The bar is not set higher for imported drugs. In fact, the bar is
identical to that for FDA-approved drugs. The problem with illegally
imported prescription drugs is that we often have no assurance that
they have been manufactured, processed and held according to the same
requirements and standards as FDA-approved drugs. FDA drug approvals
are manufacturer- and product-specific and include many requirements
relating to the product, such as manufacturing location, formulation,
source and specifications of active ingredients, processing methods,
manufacturing controls, packaging location, container/closure system,
and appearance (21 CFR 314.50). Frequently, drugs sold outside of the
United States are not manufactured or packaged by a firm that has FDA
approval for that drug. Moreover, even if the manufacturer has FDA
approval for a drug, the version produced for foreign markets may not
meet all of the specific requirements of the United States approval,
and thus would be considered to be unapproved (section 505 of the Act
(21 U.S.C. 355)).
In December 2004, the HHS Drug Importation Task Force Report on
Prescription Drug Importation concluded that any safe system of
importation would likely produce only modest savings on the national
level. The small quantity of available drugs to import would result in
little aggregate cost savings. The Task Force included a report with
the results from a Department of Commerce study. That study concluded
the reduction of research and development of competitive markers for
generic medicines, thereby denying consumers in those markets benefits,
including lower prices that Americans obtain as result of competition
between generic and brand-name drugs. In fact, U.S. consumers would
pay, on average, 50 percent more for their generic medications if they
bought them abroad.
Question. Mark McClellan has said, ``If you're certain you're
buying approved Canadian drugs from an approved Canadian pharmacy,'' he
says, ``you can have a high level of confidence that that's a good
product.''
If we could figure out a system that makes importing drugs just
like walking into a brick and mortar Canadian pharmacy, wouldn't it be
safer than what is occurring today?
Answer. The HHS Drug Importation Task Force Report on Prescription
Drug Importation issued in December 2004 outlined measures that would
be needed to implement an importation program that provides adequate
safeguards and resources to ensure that the imported drugs are safe and
effective within the meaning of the Federal Food, Drug, and Cosmetic
Act. An importation program that does not take these measures into
consideration would frustrate our ability to ensure that the
prescription drugs imported for personal use were safe and effective
for their labeled uses.
Specifically, the Task Force made a number of significant finding
about an importation program. The Task Force determined that first,
integrity of the distribution system must be ensured by, among other
measures, requiring drug pedigrees with adequate documentation,
limiting ports of entry and distribution channels, and allowing
commercial importation only from licensed foreign wholesalers to
authorized sellers in the United States. The program must exclude
personal shipments via the mail and courier services. Indeed,
regulating personal importation could be extraordinarily costly, on the
order of $3 billion a year based on estimates of the current volume.
Second, any program must limit importation to those prescription
drugs most likely to yield savings--namely high-volume products for
which a United States--approved generic is not available--and allow
importation only from countries for which we have a high degree of
confidence in the comparability of their drug regulatory systems. In
the Administration's view, Canada is the only country from which
importation should be considered at this point. Congress should also
exclude drugs or classes of drugs that pose increased safety risks in
the context of importation, such as controlled substances and drugs
that require refrigeration during shipping.
Third, any program must require that imported prescription drugs be
dispensed pursuant to a valid U.S. prescription pursuant to advice from
a trusted medical professional.
Fourth, measures must be included to ensure that any purchasers of
imported drugs are given full and adequate information regarding, among
other things, the source of the drugs, and that packaging and labels on
imported drugs meet all FDA requirements.
Fifth, any importation program must ensure effective oversight and
adequate government resources to protect American consumers.
Sixth, any program must include the ability to use streamlined
inspection procedures, and ensure appropriate remedial steps can be
taken in the event of adverse events from imported drugs.
Seventh, any program must avoid anti-competitive provisions such as
so-called ``forced sale'' provisions, and other types of price
controls.
The Task Force found that such a system would have minimal cost
savings.
Question. The FDA claims that more than 10 percent of drugs
worldwide are counterfeit.
What is this based on? What is the percentage in the European
Union? Canada? Are drugs made in Canada that enter the United States
considered counterfeit?
Answer. FDA has not stated that 10 percent of the drugs worldwide
are counterfeit. Many sources have attributed FDA with this figure;
however, it did not come from FDA. In fact, FDA does not know what the
prevalence of counterfeit drugs is globally, in the European Union, EU,
or in Canada. Drugs that are made in Canada are not considered
counterfeit unless they meet the definition of ``counterfeit drug''
under 21 U.S.C. 321(g)(2). Rather, virtually all prescription drugs
imported into the United States from Canada for personal use violate
the Federal Food, Drug, and Cosmetic Act, the Act, because they are
unapproved new drugs (section 505 of the Act (21 U.S.C. 355)), labeled
incorrectly (sections 502 and 503 of the Act (21 U.S.C. 352 and 353)),
dispensed without a valid prescription (section 503(b)(1) of the Act
(21 U.S.C. 353(b)), or imported in violation of the Act's ``American
goods returned'' provision (21 U.S.C. 381(d)(1)). Under the American
Goods Returned provision of 801(d)(1), it is illegal for anyone other
than the original manufacturer of the drug to import into the United
States a prescription drug that was originally manufactured in the
United States and sent abroad. Because a consumer is not the
manufacturer, they are not permitted to reimport prescription drugs
into the United States, even if the drugs were made in the United
States. Importing a drug into the United States that does not comply
with the labeling and dispensing requirements in the Act and/or is an
unapproved new drug is prohibited under section 301(a) and/or (d) of
the Act (21 U.S.C. 331(a) and/or (d)).
Question. There have been several recent reports that your agency,
along with the Customs and Border Patrol, has increased enforcement
efforts to stop prescription drugs from coming into the United States.
Did the FDA change its policy?
Answer. FDA's guidance on the personal importation of prescription
medicine has not changed. However, we have accommodated CBP's new role
in the initial screening of packages containing pharmaceuticals by
adjusting the application of our procedures for handling pharmaceutical
products shipped through international mail facilities. We anticipate
that efficiencies gained as a result of the revised CBP procedures will
allow CBP and FDA to screen and process a larger number of packages
than in the past.
______
Questions Submitted by Senator Richard J. Durbin
DIETARY SUPPLEMENTS
Question. Most dietary supplements provide great health benefits
for many Americans. As you know, I have worked for years to ensure that
dietary supplements are safe for the public--I hope that the dietary
supplement adverse reporting system is enacted in the near future.
Clearly, such a system would increase the workload of the FDA, and
Congress would need to do its part and provide extra funding for your
agency.
In the meantime, please advise the Subcommittee on the timeline to
publish the final rule on Good Manufacturing Practices for dietary
supplements, which were mandated by Congress 12 years ago and still
have yet to be finalized.
Answer. The proposed rule was published March 13, 2003, and
included responses to numerous comments received after publication of
the advanced notice of proposed rulemaking in 1997. The comment period
for the proposed rule was extended until August 2003. We held public
stakeholder meetings on April 29, 2003, in College Park, MD, and on May
6, 2003, in Oakland, CA. We also held a public meeting, via satellite
downlink, on May 9, 2003, with viewing sites at our district and
regional offices throughout the country. After the comment period
closed, we began the process of analyzing the comments submitted to the
proposed rule. The issues raised by the comments are complex, legally
and substantively, and in some cases, novel. We have expended
significant internal resources on reviewing and preparing responses to
the comments received. In addition, we have worked to ensure that the
goals of Dietary Supplement Health and Education Act are carried out
with careful consideration of the impact on the dietary supplement
industry. We are working to complete the rulemaking.
WOMEN'S HEALTH
Question. In late August, Dr. Susan Wood, the Assistant FDA
Commissioner for Women's Health and Director for the Office of Women's
Health, resigned over the Administration's refusal to issue a final
decision on the emergency-contraception (Plan B) application. She said,
``I can no longer serve as staff when scientific and clinic evidence,
fully evaluated and recommended for approval by professional staff
here, has been overruled.'' This decision was contrary to the
recommendations of the FDA's advisory commission and its review staff.
I requested a GAO study, released in November, which found that the
decision process to deny the application ``was unusual.'' It is my
understanding that the FDA is currently considering a revised request
to make emergency contraception available over the counter to women,
but require a prescription for younger girls.
What is the status of this request, and what is the FDA doing to
further all aspects of women's health?
Answer. On May 6, 2004, the FDA issued a ``Not Approvable'' letter
to Barr Laboratories, sponsor of a supplemental New Drug Application
proposing to make the currently approved Plan B emergency contraception
prescription product available as an over-the-counter, or OTC product.
After reviewing the supplemental application, FDA concluded that the
application could not be approved at that time because adequate data
were not provided to support the conclusion that young adolescent women
can safely use Plan B for emergency contraception without the
professional supervision of a licensed practitioner and a proposal from
the sponsor to change the requested indication to allow for marketing
of Plan B as a prescription-only product for women under 16 years of
age and a nonprescription product for women 16 years and older was
incomplete and inadequate for a full review.
The applicant chose to revise its application, and in a July 2004
resubmission, the applicant requested to market Plan B as prescription-
only for women under the age of 16 and OTC for women 16 years of age
and older. In addition, they proposed an educational program for
healthcare providers, pharmacists, and patients.
On August 26, 2005, FDA issued a letter to Duramed Research, the
successor to the Barr Laboratories application, in response to their
July resubmission. The response concluded that the available scientific
data are sufficient to support the safe and effective use of Plan B as
an OTC product for women who are 17 years of age and older. However,
the Agency stated that it was unable to reach a decision on the
approvability of the application because of unresolved issues that
relate to whether a drug may be both prescription and OTC, depending on
the age of the patient, how an age based distinction could be enforced,
and whether Rx and OTC versions of the same active ingredient may be
marketed in a single package.
On the same date that FDA issued this letter to Duramed Research,
FDA issued an advance notice of proposed rulemaking. This rulemaking
requested comment on whether to initiate a rulemaking to codify its
interpretation of section 503(b) of the Food, Drug, and Cosmetic Act
regarding when an active ingredient may be simultaneously marketed as
both a prescription and OTC drug product. The comment period on this
notice closed on November 1, 2005, and FDA is currently evaluating
those comments.
With regard to your question on what FDA is doing to further
women's health, FDA's Office of Women's Health also known as OWH
continues to expand patient protection and empower consumers for better
health by providing consumer information and funding research. OWH
continues its Take Time to Care Campaign, a multi-faceted campaign that
focuses on the dissemination of health education materials for
consumers through activities and collaborative partnerships. OWH
continues its Menopause and Hormones Education Campaign providing clear
and useful information to women about the use of hormones during
menopause. OWH continues to develop and distribute numerous consumer
information fact-sheets about FDA-regulated products for women and
their families. OWH consumer information and publications are available
in approximately 20 different languages.
OWH funds research projects related to FDA products and relevant to
women's health and sex differences. The office funds research projects
at FDA and academic institutions that are of regulatory significance to
FDA. OWH partners with other HHS organizations to identify gaps in
women's health research and to leverage limited funding. The office
participates in national medical, scientific, and health care
conferences sharing information with consumers about FDA regulated
products and participating in scientific discussions and presentations
advancing the science related to sex and gender differences.
OWH enhances patient protection and consumer health by maintaining
an extensive and current electronic ``contact database'' used to inform
patient advocacy groups, health professionals, national organizations,
and large insurance carriers of innovative products approved by FDA and
important safety information related to FDA regulated products.
OWH is working to transform systems and infrastructure to support
critical agency operations regarding electronic knowledge/information
management for an integrative IT environment across FDA Centers. The
office is developing a ``SMART'' document approach for FDA reviewers to
enhance review quality and consistency. OWH has been working on a
business case plan to better allow for electronically tracking the
inclusion of women and sex-specific analyses in studies submitted to
FDA.
ADVISORY COMMITTEES
Question. As you know, Congress required FDA to publish a quarterly
report on your efforts to find unconflicted scientists for FDA panels.
Your first report, published January 2006, gave some raw numbers (over
200 resumes review for a limited number of slots) but did nothing to
document any specific efforts to find unconflicted scientists.
What specific steps other than cursory resume reviews have you
taken to find scientists to serve on advisory committees this year that
don't have conflicts of interest?
Answer. FDA has instituted a number of additional steps this year
to find experts with limited or no conflicts of interest to serve on
FDA advisory committees and panels. FDA scientific and technical staff
and their managers generally identify and contact experts, inviting
them to fill vacancies on advisory committees or panels. In the past
year, FDA's Advisory Committee and Management Staff in the
Commissioner's Office and committee management staff at the Center
levels have briefed FDA scientific and technical staff and their
managers on the importance of identifying potential committee nominees
with limited or no conflicts of interest. In an effort to help identify
potential conflicts at the earliest possible stage, staff and
management were also advised to consider, to the extent possible, the
types of products likely to be discussed at upcoming committee and
panel meetings when interviewing candidates about financial holdings
and industry relations.
Panel and committee members themselves also identify possible
candidates to serve on advisory committees and panels. Current
committee and panel members are therefore advised to consider possible
conflicts of interest when recommending candidates for participation.
We anticipate that the efforts described above will result in the
need for fewer waivers in the future. Because committee and panel
vacancies are often filled well ahead of meetings, it can be difficult
to identify the relevant sponsors or competing companies, and therefore
potential conflicts of interest, during the nomination stage.
Importantly, one of the most critical mechanisms for preventing and
addressing conflict of interest issues continues to be the rigorous
analysis FDA conducts to identify conflicts of interest once we know
the context of a committee or panel meeting, as well as the process,
guided by both Federal statutes and regulations, for determining
whether conflict of interest waivers are appropriate. As we pursue
FDA's mission to protect the public health, we strive to fill committee
and panel vacancies with qualified experts who satisfy the committee
composition requirements set forth by Federal law. Finding experts who
have no or limited conflict of interest remains one of multiple
considerations in identifying who will fill a committee or panel
vacancy.
Question. On January 23, a joint meeting of the FDA's
Nonprescription Drug Advisory Committee and the Endocrinologic and
Metabolic Drugs Committee met to discuss GlaxoSmithKline's weight loss
drug, Orlistat, going over-the-counter. It was eventually approved 11-
3. Seven scientists were granted waivers for that meeting, including
two who had direct ties to Glaxo.
Do you think that public's faith in this committee's decision is
undermined by the fact that so many scientist required waivers of
conflicts of interest? Does your staff have enough resources to conduct
adequate background research on potential advisory committee members to
find people without such conflicts?
Answer. We believe that several factors should serve to bolster the
public's faith in the advisory committee recommendation described
above.
First, the conflict of interest waivers were granted in accordance
with Federal law. The waivers approved for the meeting described above
were granted in compliance with 18 U.S.C. 208(b)(3), 21 U.S.C.
355(n)(4), and the applicable Office of Government Ethics regulations.
Second, information regarding these waivers and the underlying
conflicts of interest was made publicly available before the advisory
committee meeting, as required by law. Waiver documents and information
regarding the nature and magnitude of the underlying conflicts of
interest were posted on FDA's Internet page prior to the meeting.
Third, the voting results of this meeting do not suggest a bias
resulting from conflicts of interest. Five of the seven waivers were
granted for members with minimal interests in competing companies. If
financial bias was present, one might expect that the final vote would
have been directed against the product under discussion. Instead, a
significant majority of the members voted in support of the product.
Moreover, as stated in the waiver documents posted online, the two
additional waivers were granted to scientists receiving minimal
compensation that arguably did not constitute ``financial interests''
under 18 U.S.C. 208(a). FDA proceeded with waivers for these
individuals, however, out of an abundance of caution.
To identify potential conflicts at the earliest possible stage,
staff and management are advised to consider, to the extent possible,
the types of products likely to be discussed at upcoming committee and
panel meetings when interviewing candidates about financial holdings
and industry relations. Panel and committee members themselves also
identify possible candidates to serve on advisory committees and
panels. Current committee and panel members are therefore advised to
consider possible conflicts of interest when recommending candidates
for participation. We believe these steps are sufficient and adequately
resourced.
METHYLMERCURY
Question. It is well known that mercury occurs naturally in the
environment and can also be released into the air through pollution. It
is well established that exposure to elevated levels of mercury during
fetal development can have adverse effects on the developing brain and
nervous system that can lead to delayed speech and motor development.
For these public health reasons, what else can be done to reduce the
amount of mercury in seafood?
Answer. There is no technical process that can remove methylmercury
from fish. Therefore, FDA and the Environmental Protection Agency (EPA)
have implemented a comprehensive public education campaign through
health professionals and the media to inform high-risk populations,
including women who may become pregnant, pregnant women, nursing
mothers and the parents of young children, about mercury in seafood.
The purpose of this campaign is to inform these high-risk consumers
that they should avoid or restrict their consumption of certain kinds
of fish, while emphasizing the importance of fish and shellfish as part
of a healthy diet.
The public education campaign includes an extensive outreach effort
to over 9,000 print and electronic media outlets, including magazines
about pregnancy and young children. Information has also been sent to
members of over 50 organizations of healthcare providers to women and
children, such as the American Academy of Pediatrics, the American
Academy of Family Physicians, the American College of Obstetricians and
Gynecologists, and the American College of Nurse Midwives, directors of
the Women, Infants, and Children programs, as well as all local health
departments.
In addition, brochures about the methylmercury advisory have been
sent to all practicing pediatricians, obstetricians, gynecologists,
nurse practitioners, and nurse midwives throughout the country for
distribution in their offices. The brochures are accompanied by a
letter to the health professional that emphasizes the health benefits
of fish. The advisory is also being distributed through exhibits at
medical and public health professional organization meetings.
To date, FDA and EPA have distributed over four million brochures.
The brochures are currently available in English and Spanish, and will
soon be available in Korean, Cambodian, Chinese, Vietnamese, Hmong, and
Portuguese. This information is also available on our Web site for use
by States, food facilities, health care professionals, and consumer
groups.
FDA and EPA will continue to review these recommendations and make
adjustments, as needed, so that consumers have access to clear, sound
dietary information. We recognize that the marketplace often has
multiple, and at times confusing or contradictory, messages. FDA will
continue to provide a clear channel for public health information
concerning methylmercury and other foodborne contaminants.
To reiterate FDA's position, consumers should continue to eat a
diet that follows the advice given in the 2005 Dietary Guidelines,
including eating a variety of seafood. It is useful to note that data
from the National Health and Nutrition Examination Survey, operated by
the Centers for Disease Control and Prevention, that measures levels of
methylmercury in U.S. women of childbearing age and young children
through 5 years of age reveal that the overwhelming majority of both
women of childbearing age and young children are exposed to
methylmercury at very low levels.
The next phase of our risk management process for methylmercury
involves a risk analysis that is examining the likelihood of adverse
effects through the range of exposures being experienced by U.S.
consumers. This project is also examining the likelihood of health and
nutritional benefits from eating fish at various levels of consumption.
Question. You recently met with Dr. David Acheson, Director of Food
Safety, regarding the adequacy of the FDA's mercury advisory. Dr.
Acheson said that the advisory is geared toward childbearing women and
young children and the information is disseminated through healthcare
providers. At present levels of mercury in canned light tuna, a child
would exceed the recommended maximum level of mercury consumption by
eating as few as two sandwiches a week that contain tuna.
What steps can the FDA take to better educate consumers about
avoiding excessive mercury intake?
Answer. FDA and the Environmental Protection Agency, also know as
the EPA, have implemented a comprehensive public education campaign
through health professionals and the media. The campaign is intended to
inform high-risk populations. These include women who may become
pregnant, pregnant women, nursing mothers and the parents of young
children, about mercury in seafood. The purpose of this campaign is to
inform these high-risk consumers that they should avoid or restrict
their consumption of certain kinds of fish, while emphasizing the
importance of fish and shellfish as part of a healthy diet.
The public education campaign includes an extensive outreach effort
to over 9,000 print and electronic media outlets, including magazines
about pregnancy and young children. Information has also been sent to
members of over 50 organizations of healthcare providers to women and
children, such as the American Academy of Pediatrics, the American
Academy of Family Physicians, the American College of Obstetricians and
Gynecologists, and the American College of Nurse Midwives, directors of
the Women, Infants, and Children programs, as well as all local health
departments.
In addition, brochures about the methylmercury advisory have been
sent to all practicing pediatricians, obstetricians, gynecologists,
nurse practitioners, and nurse midwives throughout the country for
distribution in their offices. The brochures are accompanied by a
letter to the health professional that emphasizes the health benefits
of fish. The advisory is also being distributed through exhibits at
medical and public health professional organization meetings.
To date, FDA and EPA have distributed over four million brochures.
The brochures are currently available in English and Spanish, and will
soon be available in Korean, Cambodian, Chinese, Vietnamese, Hmong, and
Portuguese. This information is also available on our Web site for use
by States, food facilities, health care professionals, and consumer
groups.
FDA and EPA will continue to review these recommendations and make
necessary adjustments to ensure consumers have access to clear, sound
dietary information. We recognize that the marketplace often has
multiple, and at times confusing or contradictory, messages. FDA will
continue to provide a clear channel for public health information
concerning methylmercury and other foodborne contaminants.
To reiterate FDA's position, consumers should continue to eat a
diet that follows the advice given in the 2005 Dietary Guidelines,
including eating a variety of seafood. It is useful to note that data
from the National Health and Nutrition Examination Survey, operated by
the Centers for Disease Control and Prevention, that measures levels of
methylmercury in U.S. women of childbearing age and young children
through 5 years of age reveal that the overwhelming majority of both
women of childbearing age and young children are exposed to
methylmercury at very low levels.
DRUG LABELING
Question. The FDA recently issued a final rule on warning label
requirements for prescription drugs. In the proposed rule, which was
issued in December of 2000, the FDA stated that the rule would NOT
preempt state law. Then, in the final rule, the agency asserts that the
rule should be interpreted to preempt state law and state tort
liability.
Given that the FDA provided no notice of its intention to preempt
state law, how did the FDA comply with the notification and
consultation requirements mandated by both the Administrative
Procedures Act and an existing Executive Order?
Answer. The Administrative Procedure Act requires the Agency to
address the comments it receives in response to proposed rules. The
discussion you reference in the preamble to the final rule regarding
Federal preemption was written in response to the comments received and
merely restates the Agency's longstanding position as articulated in
amicus briefs filed in court by the Department of Justice, or DOJ, in
cases regarding Federal preemption and drug labeling. These product
liability cases involved state law challenges to FDA approved labeling.
DOJ argued on behalf of FDA that such law suits are preempted by the
Federal Food, Drug, and Cosmetic Act when State requirements cause drug
products to be misbranded under Federal law.
Next, you correctly reference the preamble to the proposed rule's
statement that it was not intended to preempt state actions. Because
the rule itself is about the labeling of prescription drugs and is not
a rule regarding preemption, and because the codified language did not
expressly propose to preempt state law, FDA included the statement you
reference in the proposed rule. However, FDA received comments about
the product liability implications of the proposed rule and in
responding to those comments, FDA mentioned its view of preemption law
as it relates to the Physician Labeling Rule. In fact, the rule itself
does not create new preemption law in any way; FDA was simply stating
in the preamble what it believes the law already is with regard to
implied conflict preemption. In addition, implied conflict preemption
works to preempt state law when ever conflict with Federal law arises.
The agency need not state in a proposed rule that implied preemption
might arise for it to actually do so.
With regard to the Executive Order relating to Federalism, although
the preamble to the final rule merely stated the agency's view of
current implied conflict preemption law and is not part of the codified
portion of the rule, FDA consulted with a variety of State officials
and representative organizations that represent State officials and
governments on its proposed course of action before the final rule was
published. FDA considered their input before proceeding.
Question. The FDA had a long-standing policy of allowing States to
implement additional safety requirements that would compliment FDA's
rules and regulations. Why did the FDA recently stray from the long-
standing policy and assert that any differing state law or requirement
should be extinguished in favor of the Federal standards, especially in
light of new evidence showing some FDA-approved drugs and medical
devices are dangerous?
Answer. All drug products have risks and their FDA-approved
labeling is designed to reflect the known risks at any given time.
Companies are put in the impossible situation of complying with
conflicting Federal and state law when Federal law demands they use
approved drug labeling and state law requires different warnings. The
preamble language represents FDA's view of preemption law and does not
abrogate the State's ability to implement safety requirements. States
can do so as long as they do not attempt to impose requirements that
conflict with Federal law nor frustrate the purposes of Federal law. In
addition, the preamble language reflects FDA's long standing views
about Federal preemption law and does not reflect a change in FDA
policy.
Question. Unelected Federal agencies like the FDA cannot decide, on
their own, to extinguish an entire area of state law without
congressional authority. Given that Congress never gave the FDA the
authority to wipe out numerous state safety laws and requirements, how
does the agency find the authority to assert this position?
Answer. FDA did not decide to extinguish an entire area of state
law without congressional authority. The six examples in the preamble
describe the types of instances where FDA believes that under the
Supremacy Clause of the U.S. Constitution and relevant case law,
Federal law trumps state law. For instance, state law can not require a
warning that would misbrand the product under the Federal Food, Drug,
and Cosmetic Act. Similarly, FDA is the expert agency charged by
Congress in evaluating the safety and efficacy of drug products, and
implied conflict preemption would arise if a State allowed a product
liability suit for failing to warn about a specific risk that FDA
excluded from the approved label. Companies could be held liable under
state law where state requirements neither conflict with Federal
requirements nor frustrate Federal purposes.
Question. The final rule makes clear the agency's position that
even if a drug company failed to warn doctors about a drug's known
potential dangers--but the warning label was approved by the FDA--the
company would be immune from liability no matter how many patients are
injured or killed. In those situations, why shouldn't States be allowed
to protect their own citizens and allow consumers to hold these drug
companies accountable?
Answer. All drug products carry risk. With regard to safety, FDA
attempts to approve drugs that have favorable risk benefit balances,
and to approve labeling that accurately reflects the known risks about
the product. It is unfortunate that people are injured and killed by
drug products, but FDA believes that Federal law mandates what warnings
are appropriate in the form of approved drug labeling, and that state
law requiring different warnings is trumped by Federal law under the
doctrine of implied conflict preemption.
ADDITIONAL SUBMITTED STATEMENT
Senator Bennett. The subcommittee has received a statement
from the Advanced Medical Technology Association which will be
inserted in the record at this point.
[The statement follows:]
Prepared Statement of the Advanced Medical Technology Association
AdvaMed is pleased to provide this testimony on behalf of our
member companies and the patients and health care systems we serve
around the world. AdvaMed is the largest medical technology trade
association in the world, representing more than 1,300 medical device,
diagnostic products and health information systems manufacturers of all
sizes. AdvaMed's members manufacture nearly 90 percent of the $86
billion of health care technology products purchased annually in the
United States, and more than 50 percent of the $220 billion purchased
annually around the world. AdvaMed members range from the largest to
the smallest medical technology innovators and companies and directly
employ about 350,000 workers in the United States. More than 70 percent
of our members have less than $30 million in domestic sales annually.
AdvaMed supports the President's fiscal year 2007 budget request of
$229,334,000 for the Food and Drug Administration's (FDA's) Center for
Devices and Radiological Health (CDRH). This inflationary increase
amount satisfies the fiscal year 2007 requirements of the Medical
Device User Fee and Modernization Act (MDUFMA--Public Law 107-250) and
the Medical Device User Fee and Stabilization Act (MDUFSA--Public Law
109-43) and is crucial to ensure patients have timely access to
lifesaving and life-enhancing products.
Medical Device User Fees
The increasing number and complexity of medical device submissions
have overwhelmed CDRH over the last decade. When MDUFMA was crafted,
review times for breakthrough products often exceeded over 400 days,
despite a statutory ceiling of 180 days. To address these chronic
delays, Congress passed MDUFMA in October of 2002 to supplement FDA's
resources and expertise and reduce review times for medical
technologies. MDUFMA creates a predictable and adequate funding base
for CDRH through a combination of industry-paid user fees and an
increase in Congressional funding for the agency. Congress also passed
MDUFSA last year to ensure the continuance of this critical program.
Medical technology companies have already paid over $80 million in
user fees and will add more than $150 million to CDRH resources during
the first 5 years of the historic MDUFMA agreement. Although the
additional appropriations did not materialize in the first 2 budget
years of the MDUFMA agreement, Congress provided the nearly $26 million
requested by the President for fiscal year 2005 and the President's
inflationary requested amount for fiscal year 2006. This, along with
the fiscal year 2007 request for an inflationary increase, maintains
the MUDFMA program.
CDRH must be funded adequately to ensure the goals of MDUFMA are
met, maintain the United States' position in the rapidly advancing
field of medical technology, and ensure patients' timely access to
needed medical breakthroughs. AdvaMed requests that the fiscal year
2006 Agriculture Appropriations bill fully fund CDRH at $229,334,000 to
accomplish these important goals.
Additional Fees and Issues
AdvaMed notes with interest that the President's budget calls for
collecting some $22 million for re-inspection fees. We are interested
to learn more about the nature of these fees and to which services
currently provided by the FDA they will apply. As was discussed last
year during crafting of MDUFSA, we are still working with the FDA to
learn how the current device user fees are used and generally have
concerns about additional fees being applied without better
understanding of their use and reflection of costs for providing the
intended services. AdvaMed believes any additional fees must be
additive to the baseline and must be associated with clearly identified
increased performance to benefit the fee payer above and beyond current
performance.
Additionally, AdvaMed is concerned that, as in years past, attempts
will be made in the fiscal year 2007 appropriations process to alter
FDA policy and procedures related to the regulation of new and existing
devices. AdvaMed generally opposes such attempts to alter fundamental
FDA regulatory policy for medical devices on appropriations bills. We
stand ready to offer our expertise on such matters should the need
arise in the coming months.
Background on the Medical Device User Fee Program
America is on the cusp of an unprecedented revolution in medical
technology driven by major private and public investments in scientific
research and computer technology. Congress has also made a multi-
billion dollar commitment to double medical research at NIH and unravel
the human genome. Medical technology companies also doubled research
and development spending in the decade of the 90's.
The vibrant medical technology sector has driven employment gains
and a strong balance of trade much to the benefit of the American
patient and economy over the last several years. At the same time, the
growing number and complexity of new medical devices throughout the
last decade, coupled with a drop in the absolute number of reviewers at
CDRH has resulted in severe budget strain and increasing delays in
approval of new medical technologies for patients.
Prior to passage of MDUFMA, CDRH faced increasing challenges as a
result of dwindling resources and accelerating innovation. Staff levels
had dropped by 8 percent between 1995 and 2001. By 2001, the average
total review time for premarket approval applications had risen to 411
days, more than twice the statutory review time. An FDA science panel
warned at the time that increasingly rapid advances in technology
``threaten to overwhelm'' CDRH's limited resources.
On October 26, 2002, President Bush signed MDUFMA, which was
unanimously passed by Congress, into law to give CDRH additional
resources and expertise to help provide timely patient access to new
medical technologies. It established an industry-funded user fee
program to provide up to $35 million each year to help the agency meet
rigorous new performance goals.
Key regulatory reforms in MDUFMA are designed to:
--Eliminate bureaucratic delays in review of combination products by
establishing a new office to oversee these technologies
--Authorize FDA to accredit third-party inspectors to audit medical
technology companies with a good track record of compliance;
--Encourage timely, thorough premarket reviews by codifying the PMA
``modular review'' program and extending the third-party review
program for 510(k)s;
--Permit paperless device labeling and electronic facility
registration.
--Strengthen FDA regulation of reprocessed disposable devices.
From bioengineered organs and implantable artificial hearts to
gene-based diagnostic tests and molecular imaging systems, America's
medical technology companies are developing thousands of promising new
tests and treatments. AdvaMed believes full implementation of MDUFMA
will help ensure these advances reach the millions of patients who need
them.
The user fee provisions in the law set fees for premarket approval
applications, supplements and 510(k) submissions. Under the original
law, these fees, combined with funds from increased appropriations,
will provide FDA's device program with more than $225 million in
additional resources over the 5 years of the program. A letter
agreement accompanying the bill sets review performance goals for the
agency.
To assure that these user fees would have an additive effect on the
CDRH budget, MDUFMA requires CDRH receive a $15 million appropriations
increase in each of the first 3 years of the program (fiscal year 2003,
fiscal year 2004 and fiscal year 2005) for a total of $45 million by
the end of fiscal year 2005, or the user-fee program terminates in
fiscal year 2006. These funds are designed to allow CDRH to upgrade
information technology and other infrastructure necessary to carry-out
a user-fee program and to meet the performance goals.
MDUFMA passed both houses of Congress on the last day of the
regular session in October 2002. Owing to the extremely late timing of
MDUFMA passage and a very tight budget climate, MDUFMA funding targets
were not met in either of the first 2 years of the MDUFMA agreement.
MDUFSA was passed last year to allow the program to continue despite
the funding shortages in the early years of the program. MDUFSA also
addressed the significant rate of increases in fees paid by industry.
As Congress has struggled to provide its funding, industry paid user
fees (per submission) that far exceed what was expected by MDUFMA.
Increases of 35 percent, 15.7 percent and a projected 20 percent for
fiscal year 2006 for individual PMA submissions were troubling to
industry, and we appreciate the steps Congress took to limit the rates
of increase until the program can be reauthorized in 2007.
To maintain the MDUFMA program and protect investments made by the
Agency, American consumers and a leading source of job growth in our
economy, we ask Congress to again meet the President's fiscal year 2007
budget request for CDRH.
Conclusion
AdvaMed appreciates the Subcommittee's efforts last year and urges
them to continue on this path to fully fund MDUFMA and ready FDA for
the coming era of biomedical innovation and patients that await timely
access to the coming dramatic breakthroughs in medicine. AdvaMed
requests that the fiscal year 2007 Agriculture Appropriations, Rural
Development, Food and Drug Administration and Related Agencies bill
fully fund CDRH at $229,334,000 to accomplish these important goals. We
have concerns about the inclusion of new fees for the FDA to carry out
core mission activities and urge the committee to refrain from altering
FDA policy and procedures related to the regulation of new and existing
devices in the fiscal year 2007 appropriations process.
AdvaMed thanks the committee for this opportunity to present our
views and we look forward to working with you to help prepare FDA for
the coming revolution in medical technology.
SUBCOMMITTEE RECESS
Senator Bennett. Thank you very much.
The subcommittee is recessed.
[Whereupon, at 11:25 a.m., Tuesday, March 14, the
subcommittee was recessed, to reconvene subject to the call of
the Chair.]
AGRICULTURE, RURAL DEVELOPMENT, AND RELATED AGENCIES APPROPRIATIONS FOR
FISCAL YEAR 2007
----------
THURSDAY, MARCH 30, 2006
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
The subcommittee met at 10 a.m., in room SD-192, Dirksen
Senate Office Building, Hon. Robert F. Bennett (chairman)
presiding.
Present: Senators Bennett and Kohl.
DEPARTMENT OF AGRICULTURE
STATEMENTS OF:
KEITH COLLINS, CHIEF ECONOMIST
J.B. PENN, UNDER SECRETARY, FARM AND FOREIGN AGRICULTURAL
SERVICES
MARK REY, UNDER SECRETARY, NATURAL RESOURCES AND ENVIRONMENT
ERIC M. BOST, UNDER SECRETARY, FOOD, NUTRITION, AND CONSUMER
SERVICES
RICHARD RAYMOND, M.D., UNDER SECRETARY, FOOD SAFETY
CHARLES LAMBERT, ACTING UNDER SECRETARY, MARKETING AND
REGULATORY PROGRAMS
OPENING STATEMENT OF SENATOR ROBERT F. BENNETT
Senator Bennett. The subcommittee will come to order.
This is the subcommittee's third and final hearing on the
administration's budget request for fiscal 2007 for the
Department of Agriculture.
And today, we have the following witnesses: Dr. Keith
Collins, who is the Chief Economist at USDA; Dr. J.B. Penn, the
Under Secretary for Farm and Foreign Agricultural Services; Mr.
Mark Rey, the Under Secretary for Natural Resources and
Environment; Mr. Eric Bost, the Under Secretary for Food,
Nutrition, and Consumer Services; Dr. Richard Raymond, Under
Secretary for Food Safety; and Dr. Charles Lambert, Acting
Under Secretary for Marketing and Regulatory Programs.
And if Dr. Lambert nods off during the hearing, we will
understand and forgive him. He has just gotten off an airplane
from Japan. We want to ask you, Dr. Lambert, about what you
found when you got over there with the activities.
They are accompanied by Mr. Dennis Kaplan, of the Office of
Budget and Program Analysis. And we thank you all for being
here this morning.
We are going to focus on the budget for the mission areas
that each of you is responsible for, but not limited to those
areas, if you have additional information to share with us.
This is production, agriculture, trade, conservation,
nutrition, food safety, animal and plant health, and
marketing--a wide portfolio represented by this group of half
dozen under secretaries at the table.
Unfortunately, the Under Secretaries for Rural Development
and Research, Education, and Economics could not join us this
morning. But we will receive information from them later. The
mission areas of the under secretaries before us demonstrate
the breadth of the programs offered by USDA.
Now the combined fiscal year 2007 discretionary budget
request for the agencies under the jurisdiction of this group
of under secretaries is $11.1 billion. And to compare where we
are, discretionary funding provided in fiscal 2006 for these
mission areas was approximately $11.3 billion. So there has
been a cut. A real cut, not a Washington cut.
A Washington cut is where you spend more than you did last
year, but less than somebody thought you should. A real cut is
where you spend less than you did last year, and there is a
real cut of $200 million. And that represents a 2 percent
decrease from fiscal 2006 levels.
Now you drill down below that top number, and the fiscal
2007 budget request for Under Secretary Rey is 21 percent below
fiscal 2006. For Secretary Raymond, it is 9 percent below
fiscal 2006. For Secretary Bost, it is 2 percent on the overall
number below 2006. Secretary Penn, 2 percent above 2006. And
Acting Secretary Lambert is 11 percent above fiscal 2006.
So while the 2 percent number is enough to get our
attention as a whole, you get into the specifics, and you get
even closer attention that has to be paid. And I am sure we
will discuss that.
Now some will say that the message from this is that it is
better to be an acting under secretary than an under secretary.
But I think that is coincidence.
Now, before I turn to Senator Kohl for his remarks, I would
like to specifically mention the efforts of the Farm Service
Agency, Natural Resources Conservation Service, and the Food
and Nutrition Service in the wake of Hurricane Katrina.
The employees of these agencies rescued and fed people in
the immediate aftermath, and they are currently helping the
region recover from this terrible disaster. And we would be
remiss if we did not formally acknowledge their work and the
leadership that you gentlemen provided to them in that time of
great national distress.
Now, members who are not here are free to submit questions
for the record. Senator Kohl and I may have some questions for
the record, in addition to the round of questioning.
But again, gentlemen, we welcome you here and thank you for
your service.
Senator Kohl.
Senator Kohl. I join Chairman Bennett this morning in
welcoming members of this panel who represent nearly all of the
agencies within USDA. Your presence shows the diverse missions
of the USDA, and this panel is an excellent representative of
the many priorities that we must balance--farm support,
nutrition, marketing, foreign aid, food safety, conservation.
All of those mission areas are represented here today.
American farmers are no strangers to adversity, harsh
weather, or unpredictable markets. And the past year or so has
led them to again face hard times. Storms have hammered the
Gulf State coast. Drought has gripped much of the Nation.
Wildfires have raged across prairie lands. Energy costs have
cut profit margins, and foreign markets for certain products
have been closed.
Around the world, drought continues to devastate Africa.
Millions of Americans were displaced because of the hurricanes
and are still trying to find their way. Another case of mad cow
disease and the impending arrival of avian flu remind us just
how at risk we really are.
It is not fortunate, therefore, that the President's budget
calls for cuts in nearly all of these areas. It proposes
significant cuts to support programs for dairy and other
producers. It imposes new fees for farmers and rural families
seeking credit. It eliminates many ongoing conservation and
research projects. It eliminates a small, but important elderly
feeding program. It proposes food safety user fees that have
been rejected time and again.
On the other side of the coin, technology and market
conditions are giving U.S. producers an important role in
helping this Nation move closer to energy independence.
However, our central challenge is to help guide these changes
so that they benefit everyone and not just a few.
Mr. Chairman, I look forward to working with you to develop
an appropriations bill to help support all of USDA's
constituencies in what we all know is going to be a challenging
year.
Thank you.
Senator Bennett. Thank you very much.
Let us go in the order in which I introduced the witnesses,
which means, Dr. Collins, that we start with you.
STATEMENT OF KEITH COLLINS
Mr. Collins. Thank you very much, Mr. Chairman, Mr. Kohl.
Thanks for the opportunity to begin this hearing with some
brief comments on the general economic environment for U.S.
agriculture, which I hope will provide a backdrop for your
deliberations on the USDA's budget.
Over the past 2 years, U.S. agriculture has experienced
solid growth in both domestic and export demand. We have had
record-high cattle, broiler, and milk prices; record-high net
farm income in 2004; near record-high again in 2005; and
record-high net wealth.
Such accomplishments in agriculture occur only
periodically. And when they occur, they provide the opportunity
for savings and wealth creation that enables many farmers to
maintain their operations during less prosperous times.
Large harvests last fall, adverse weather, higher energy
prices, the continued loss of Asian beef markets, the global
spread of avian influenza are some of the challenges the farm
economy must surmount in 2006. And facing these and other
challenges, I would like to highlight several key developments.
First, global and U.S. farm product demand generally
remains favorable. The United States and world economies show
strong growth, despite this morning's reduced GDP estimate for
the fourth quarter, we are looking for an improvement in 2006.
U.S. agricultural exports are forecast to be a record-high
$64.5 billion, and U.S. food and industrial product demand is
expanding.
Second, most world commodity markets are moving toward
better supply and demand balance. The record-high crops of 2004
raised global stock levels and reduced market prices. But this
year, we have generally lower world production, higher
consumption, and as a result, stocks of major commodities are
likely to decline, but they will still remain above the levels
of 2 years ago.
A notable exception is soybeans, where with very large
South American harvests in prospect we once again will add to
our already large supplies.
The U.S. market is showing more of an imbalance than the
world market as we face a second consecutive year of higher
corn, soybeans, and cotton stocks. Last fall's large harvests
are more than offsetting increased corn demand for ethanol and
strong soybean and cotton exports to China.
Wheat and rice look a little more robust as poor weather is
reducing the 2006 global wheat production prospects, and rice
has the tightest global market in over 3 decades. All of this
for this year means a mixed picture for U.S. crop prices
compared to the across-the-board declines we saw last year.
A third observation is that U.S. livestock and poultry
production is now rising fairly rapidly. Meat and poultry
production is expected to be up 3 percent this year, led by a 5
percent increase in beef production. As U.S. cattle numbers are
increasing, we expect more live cattle imports from Canada.
The large increase in meat supplies is reducing cattle,
hog, and broiler prices. With progress in opening foreign beef
markets, we expect higher beef exports in 2006, although they
will remain well below the pre-BSE levels. Pork continues to
benefit with another record-high export year in prospect.
And for poultry, as a result of avian influenza, we have
been reducing our export forecast. But at this point, we still
expect exports to be slightly above a year ago. Leg quarters,
in fact, have become quite a bargain. Prices ranged from 40 to
50 cents a pound late last fall. Last week, they were selling
for under 20 cents a pound, which should attract foreign buyer
interest.
Milk production is expected to increase a hefty 3 percent
for the second year in a row this year, and that will lead to
lower prices, Milk Income Loss Contract payments, and a modest
increase in price support purchases for nonfat dry milk.
This year's return to trend in many markets means somewhat
lower farm cash receipts. Also, Government payments are
expected to be down by $4.5 billion because of lower disaster,
tobacco, and marketing loan payments.
Higher interest rates and energy costs are expected to
increase farm production expenditures again in 2006. Thus, we
have lower revenues and higher costs, that suggests the U.S.
farm income in 2006 will drop from the unusually high levels of
the last few years to the long-term average level.
PREPARED STATEMENT
Meanwhile, farm land values are expected to keep rising,
net worth for farmers is expected to set another record high,
and the farm debt-to-asset ratio is expected to drop to the
lowest level in over 4 decades.
While the coming year will present more of a financial
challenge for many producers, a strong balance sheet, average
cash flows, and the resiliency in managerial capacities of
America's farmers should help them meet this year's challenges.
Thank you, Mr. Chairman.
[The statement follows:]
Prepared Statement of Keith Collins
Mr. Chairman and Members of the Subcommittee thank you for the
opportunity to discuss the general economic situation in U.S.
agriculture as background for the Subcommittee's review of the
Department of Agriculture's (USDA) fiscal year 2007 budget submission.
I will review the major factors affecting agricultural markets in the
coming year and their implications for financial conditions in U.S.
agriculture.
U.S. agriculture experienced an extremely strong recovery following
the economic slowdown at the start of this decade. With solid growth in
domestic and export demand, large crop harvests, and record-high
cattle, broiler and milk prices, net farm income reached a record high
in 2004. In 2005, net farm income reached the second highest level on
record despite a large increase in crop stocks which reduced crop
prices; multiple hurricanes that shut down the central marketing
infrastructure of the country; sharply higher energy prices that raised
production, marketing and processing costs; continued loss of Asian
beef markets; and the emergence of global Avian Influenza (AI)
concerns. Adverse factors were partially offset by continued strong
global demand for food, the ability of the agricultural system to
rebound from shocks, a substantial increase in government support
spending and continued strong livestock and livestock product markets.
In the year ahead, global economic growth and food demand is
expected to remain strong, but markets for major crops will face lower
prices from higher stock levels built up from the large production
levels the past 2 years. In addition, expansion of livestock and
livestock product production following several years of profitable
returns will likely reduce market prices somewhat. Higher interest
rates and energy costs and continued disruption of markets due to
animal diseases and weather are also likely to be factors affecting
economic performance. Together, these factors suggest that net cash
farm income will drop in 2006. Even with the contraction and more
financial stress for some farming operations, the overall farm economy
is expected to perform at long-term average levels with farm household
income remaining strong and farm net worth continuing to increase.
Global Economic Growth and Farm Product Demand
The U.S. economy grew at 3.5 percent in 2005, down from 2004's 4.2
percent but well above 2003's 2.7 percent. For 2006, U.S. Gross
Domestic Product (GDP) growth is expected to be slightly less than last
year. The decline in the rate of growth in 2006 from last year is
expected to be due to slower growth in consumption, housing, and tight
energy markets. Increased tightness in labor markets is likely also to
be a factor. As the unemployment rate continues to decline, the lack of
unemployed labor resources tends to slow real productivity and output
growth.
Foreign economic growth retreated in 2005 from 2004's strong growth
rate of 4.0 percent, with most areas slowing, particularly Western
Europe. This year, Western Europe is expected to have the strongest
growth since 2000, and growth prospects appear good in Canada, Japan,
East Asia and Mexico--all important markets for U.S. agriculture.
Foreign economic growth is expected to rise to 3.4 percent in 2006, up
from 2005's 3.2 percent, which would be the second strongest rate of
foreign economic growth since 2000.
With the U.S. economy expected to have another year of steady
growth, consumption expenditures on food remain positive, although the
rate of growth is likely to decline to near 3.5 percent from the
unusually high 5 percent levels in 2004 and 2005. Average growth was
less than 2.5 percent during the slowdown in 2001 and 2002. This year,
slower growth in consumer spending on food is likely, as consumers face
heavier debt loads, higher energy costs, and are less likely to use
household assets to finance consumption. Consumer spending, which
accounts for two-thirds of GDP, increased only 1.4 percent in the last
quarter of 2005, sharply below the third-quarter, but a rebound is
expected in the first quarter of 2006.
U.S. Agricultural Trade
Turning to foreign demand for U.S. agricultural products, our
latest quarterly forecast for farm exports in fiscal year 2006,
released in February, is a record-high $64.5 billion, up $2 billion
from 2005's record and unchanged from our last quarterly forecast.
Stronger horticultural product, cotton, and beef exports are expected
to show the greatest gains, while oilseeds and their products, the
largest decline compared with fiscal year 2005. The increase in
forecast beef exports assumes that the current suspension in Japanese
imports is a temporary divergence from the earlier Japanese policy
decision to resume imports. We have no information as to when imports
will resume, but for the purposes of making a forecast, we simply
assume Japan resumes imports of U.S. beef during the second quarter of
2006.
U.S. agricultural imports are forecast at $63.5 billion, up $2
billion from our last forecast, and $5.8 billion more than in fiscal
year 2005. Much of the increase from last year and from our last
forecast is due to increased imports of coffee, cocoa, sugar, wine,
beer, and fruits. The agricultural trade surplus for fiscal year 2006
is forecast at $1 billion, down from $3 billion in our last forecast
and $4.7 billion in fiscal year 2005.
While the agricultural export-weighted value of the dollar
appreciated in the second half of 2005, at the start of 2006, it was
still over 10 percent below the start of the 2003 level. The current
period of strong foreign economic growth and continued effects of the
decline in the value of the dollar from several years ago should show
up in higher U.S. agricultural exports in the future and a modestly
improving trade balance. However, the strong consumption growth in the
United States and the consumer desire for horticultural products
suggest the trade balance in the future will be much smaller than in
the past. USDA's long-run projections issued in February forecast U.S.
agricultural exports rising to nearly $73 billion by fiscal year 2010
and imports of $70.5 billion, leaving a trade surplus of a little over
$2 billion. By 2015, projected exports equal projected imports.
Crops: Supply, Demand, and Price
The 2004/2005 marketing year began with relatively tight crop
supplies, but global production of grains, oilseeds and cotton reached
record-highs. As a result, stock levels increased, market prices
declined, and farm program costs rose. In 2005/2006, global production
was near-record high for most major crops, except for oilseeds
production which set another record-high. Global total use this year is
expected to be about the same as last year for rice and higher than
last year for wheat, coarse grains, oilseeds, and cotton. With
generally lower production and rising consumption, global stocks of
most major commodities will decline this year but remain above the
level of 2 years ago. In the United States, supplies for feed grains,
cotton, rice and soybeans are at record highs this year, although not
for wheat. Unlike the world market where major crop stocks are expected
to decline, the large 2005-crop U.S. production levels are expected to
cause an increase in corn, soybean, and cotton stocks this year, while
wheat remains about the same and rice declines.
World grain (wheat and coarse grain) consumption this year is
expected to exceed last year's record high and slightly exceed reduced
world production. This will lead to a drawdown in world grain stocks,
with world stocks as a percent of total use not excessive. The picture
for oilseeds is quite different. Global oilseed production is forecast
to be record high for the 10 consecutive year. And, in the coming year,
this increase in production is expected to exceed the increase in
consumption, resulting in higher global stocks. For soybeans, global
stocks as a percent of use is forecast to exceed the high set in 1986.
For the United States, the 2003/2004 grain and oilseed markets,
which featured strong demand and tight supplies, was a major
contributor to the record high farm income of the past 2 calendar
years. The current market prospects have changed as a result of 2
consecutive years of large production and increasing stock levels.
The U.S. soybean situation reflects the world situation, with U.S.
stocks expected to be excessive, rising nearly 400 percent above the
level of 2 years ago. This jump reflects our bumper harvest this past
fall and strong competition from Brazil. For example, Brazil had record
high soybean exports during the October-December 2005 quarter, and a
rebound in Brazilian production from last year's drought is expected to
boost Brazil's soybean production this spring to 58.5 million tons, up
from 53 million last year. Still, U.S. soybean prices this winter have
been strong in the face of this prospective stock buildup, reflecting
perhaps a risk premium, purchases by index funds, or other factors. For
the year as a whole, the average price received for soybeans is
expected to average $5.50 per bushel compared with $5.74 last marketing
year. If the Southern Hemisphere crop and the increase in U.S. stocks
materialize as expected, soybean prices will likely drop in the second
half of the year and into 2006/2007.
For 2006/2007, last year's record-high soybean yields, pressure to
rotate to more soybeans from corn, and high energy costs may cause some
shifting of corn to soybeans. We expect an increase in soybean planted
area of nearly 2 million acres to 74 million. The increase in planted
area, combined with trend yields, would result in production levels
near expected demand; consequently, carryover levels would remain about
the same. With continued heavy stocks and large expected supplies in
South America, weaker prices are expected for soybeans.
The U.S. corn market in 2005/2006 is expected to see another year
of increasing carryover with ending stocks 150 percent above 2 years
ago. Corn prices have rebounded from the extraordinary lows following
the hurricanes when the transportation network was impaired and are
expected to average $1.90 per bushel this year, down from $2.06 last
year. As of the end of February, the average corn loan deficiency
payment rate made so far on 9.75 billion bushels of corn (88 percent of
the 2005 crop), was $0.44 per bushel, up sharply from $0.27 averaged on
the 2004 crop. In addition, producers received marketing loan gains
averaging $0.42 per bushel on 569 million bushels of corn.
Another important influence on this year's and future corn and
other crop markets is biofuels. While biodiesel production has
increased from less than a half million gallons in 1999 to over 70
million in 2005, it remains relatively small, equivalent to 3 percent
of soybean oil production. That is about where ethanol production was
relative to corn production in 1983. Ethanol production this marketing
year is expected to account for 14 percent of U.S. corn production. The
USDA baseline, released on February 10, 2006, projects ethanol
production will account for 22 percent of corn use by 2010 and drive
corn prices to $2.60 per bushel.
In 2004, ethanol accounted for about 2 percent of motor gasoline
use in the United States on a btu basis. Under the Department of
Energy's baseline projections for motor gasoline and ethanol use to
2010, gasoline use is expected to grow 1.2 percent per year, and
ethanol use at over 15 percent per year. Consequently, ethanol is
expected to account for over one-quarter of the increase in motor
gasoline use through 2010.
For 2006/2007, with soybean area expected to expand, high corn
stocks, and high energy prices, corn planted area is forecast to
decline 1.3 million acres to 80.5 million. Less acreage and stronger
ethanol use is expected to reduce carryover and raise corn prices $0.25
per bushel, or 13 percent, over the 2005/2006 expected average farm
price.
The 2005/2006 wheat market is in good overall balance, with
carryover stocks forecast to be nearly the same as last year and the
year before. Farm prices are forecast to average $3.40 per bushel, the
same as in each of the past 2 marketing years. After much of the 2005-
crop had been marketed, wheat prices started to rise reflecting reduced
2006-crop prospects due to deteriorating weather conditions in the
United States and abroad and a currently tight situation for hard red
winter wheat. The last week of February saw the nearby Kansas City
wheat futures price reach a 40-month high.
For 2006/2007, wheat acreage, which has been trending down and is
now 30 million acres less than 25 years ago, is expected to increase by
less than 1 million acres to 58 million due to more winter wheat
planted last fall. Fall seedings were up reflecting the better price
prospects than other crops and good planting weather in the Corn Belt.
Yield prospects for the 2006 crop are clouded by the intense drought in
the South in areas west of the Mississippi River. Winter wheat in Texas
was rated 89 percent poor or very poor as the end of February and the
quality of the wheat crop is also reported to be down sharply in
Oklahoma. Wheat yield problems are also expected in the Former Soviet
Union, an important grain producer, where planted acreage of winter
grains are down and a very harsh winter is likely to result in above
average winterkill. These poor starting conditions suggest global wheat
production will be down again in 2006/2007. If at this point we use
trend yields, U.S. wheat production would be near expected demand and
wheat 2006/2007 carryover levels and average farm price would remain
about the same as this year.
U.S. cotton production reached an all-time high in 2005/2006, and
stocks are expected to rise for the second year in a row to 7 million
bales, double the level 2 years ago. The increase is expected despite a
forecast of record-high exports of 16.4 million bales, up 2 million
from last season. About half of U.S. cotton exports are expected to go
to China where domestic use is rising rapidly and production is down
from last season. U.S. cotton mill use continues to trend down as
textile mill activity continues to move offshore. Mill use this year is
forecast at 5.9 million bales, compared with 6.7 million last season.
Even with stocks increasing, farm prices of cotton have been running
above year-ago levels as the world stock situation is tightening.
For 2006/2007, lower production is expected to support prices as a
third consecutive record-high crop is unlikely. With the prospect of
continued strong exports, ending stocks will likely decline to more
average levels in 2006/2007.
Despite a near-record crop, a sharp increase in exports is moving
the U.S. rice market into balance with only a slight rise in stocks
expected this year compared with 2 years ago. Rice ending stocks are
forecast at 26.5 million cwt., down from carry-in stocks of 37.7
million cwt. Medium grain stocks at 5.25 million cwt are the tightest
on record (since 1982/1983-first year of supply and use statistics for
rice by class). The global rice market is the major factor contributing
to strong exports and steady U.S. farm prices, as global ending stocks
are expected to be the lowest since 1982/1983, with the stocks-to-use
ratio the lowest since 1974/1975. U.S. average farm-level rice prices
are forecast at $7.80 per cwt. this season compared with $7.33 last
season.
For 2006/2007, a rebound from last fall's reduced yields would
raise rice production, but with production costs rising, producers are
expected to reduce plantings causing production to decline for the
second year in a row. As in 2005/06, total use is expected to outpace
production leading to another decline in carryover stocks and higher
rice farm prices in 2006/2007.
Under the 2002 Farm Bill, lower prices for major crops trigger
increases in counter-cyclical payments and marketing assistance loan
benefits, thus increasing farm program costs. Based on current market
price projections, counter-cyclical payments could reach $5.2 billion
for the 2005/2006 crops, up from about $4.3 billion for the 2004/2005
crops and $0.5 billion for the 2003/2004 crops. Marketing assistance
loan benefits (loan deficiency payments, marketing loan gains and
certificate exchange gains) are projected to increase from less than $1
billion for the 2003/2004 crops to $5.5 billion for the 2004/05 crops
to about $6.1 billion for the 2005/2006 crops. In addition, program
crop producers receive nearly $5.3 billion annually in direct payments.
The 2005/2006 sugar market has been very different from other crops
this year as hurricane-reduced production has driven prices up
substantially. Since this market is heavily regulated by USDA, the
Department has substantially increased import quotas to meet this
year's demand and help relieve market tightness. In the current
marketing year, sugar imports are forecast to reach 3.1 million tons,
up from 2.1 million tons last year and 1.8 million tons 2 years ago.
Fruits, vegetables, nursery and greenhouse products continue to
provide good news for U.S. agriculture. They are expected to generate
$49 billion in sales in 2006, similar to 2005, and account for 21
percent of farm cash receipts. Sales of these products are now about
equal to the value of sales of program crops. U.S. horticultural
exports are forecast at $16.3 billion and imports at $28.2 billion,
indicating a continuing widening of the sector's traditional trade
deficit.
Livestock & Livestock Products: Production, Demand and Price
Turning to livestock and poultry markets, U.S. meat exports
continue to be heavily influenced by animal diseases. Although we
expect rising beef exports in 2006 as trade with Japan eventually
resumes, beef exports are still expected to be only about 40 percent of
the level of 2003. Our current forecast assumes shipments to Japan
resume in the second quarter and does not include any exports to South
Korea. We expect the Korean market to open soon and at that time we
will incorporate exports to South Korea into our forecasts. With
continuing limitations on beef exports, pork exports are forecast to be
4 percent higher than 2005's record high. Lower broiler prices this
year would normally help increase exports. However, in January, the
forecast of the rate of growth in poultry exports was lowered to a 4
percent increase, half the rate of our prior estimate and down from
last year's 9 percent increase, due to reduced consumption in some
countries due to AI concerns. In recent weeks, AI has been found in
Europe and other areas, suggesting USDA's poultry export forecast could
go lower in the months ahead.
While animal disease issues are surrounding meat and poultry export
prospects, U.S. production of meat and poultry is expected to be
record-high in 2006, leading to record-high U.S. per capita meat and
poultry consumption. With a 3 percent increase in U.S. meat and poultry
production in 2006, a mixed export picture, and some slowing in the
growth of overall consumer expenditures, lower live animal, meat and
poultry prices are expected in 2006.
Even though several countries continued to block imports of U.S.
beef, U.S. livestock markets were very strong in 2005. The index of
prices received for meat animals was an all-time high, 4 percent above
2004 and 17 percent above 2003. Although U.S. cattle numbers increased
for the first time in 9 years in 2005, cattle slaughter continued to
drop. For 2006, the situation will change. First, the U.S. cattle
inventory on January 1, 2006 was up 2 percent over last year,
indicating that producers are now moving well into the expansion phase
of the cattle cycle. Second, live cattle imports from Canada will be up
in 2005. Third, higher carcass weights are expected. And lastly,
drought conditions in Texas and Oklahoma are causing some producers to
market additional animals and to place cattle in feedlots sooner.
Consequently, cattle slaughter and beef production are expected to
increase a strong 5 percent in 2006. Despite the increase in output,
choice fed cattle prices are expected to decline only about 2 percent
to about $85 per cwt., and retail beef prices are expected to be down
about 3-4 percent.
Despite sustained profitability in hog production, hog producers
have been cautious about expanding the past few years. Still, with
back-to-back years of good returns, we expect hog slaughter and pork
production to be up about 3 percent in 2006 following a modest increase
of 0.8 percent in 2005. Hog prices are expected be average $44 per cwt.
in 2005, down about 13 percent from last year, but still stronger than
during the 1998 to 2003 period.
Broiler production is expected to again be record high in 2006. A
nearly 4 percent increase in production in 2005 was driven by record-
high broiler prices in 2004 and low feed prices. Although broiler
prices fell about 5 percent in 2005, they remained fairly strong and
with favorable feed costs, broiler production is expected to be about 2
percent higher in 2006. Wholesale broiler prices are expected to
average 67 cents per pound, down from 70.8 cents last year. However,
this forecast was made prior to the finding of AI in Europe and the
current acceleration in its spread. As AI has become more widespread,
world poultry trade has slowed, which is now adversely affecting U.S.
poultry exports and broiler prices. In late February, prices of leg
quarters, the principal U.S. broiler export product, had fallen to the
low 20-cents-per-pound range, after reaching the high 40-cents-per-
pound range in late fall.
Milk, like meat and poultry, is coming off 2 years of strong
prices. Widespread forage problems and reduced rBST are largely behind
producers now, and following record and near record milk prices in 2004
and 2005, milk production is accelerating. U.S. milk production in
January 2006 was up an extremely strong 5 percent over January 2005. In
2004, milk production was flat; in 2005, it rose 3.3 percent; and in
2006, it is forecast to be up nearly 3 percent despite declining
prices. Increased milk production this year is expected to exceed the
trend growth in dairy product demand, consequently, the all-milk price
is forecast to average $13.45 per cwt. in 2006, down 10 percent from
2005. Payments were triggered under the newly reauthorized Milk Income
Loss Contract Program beginning in December 2005, following essentially
no payments from the second quarter of 2004 through the third quarter
of 2005. The payment rate for March will be $0.41 per cwt. the highest
rate since March 2004. Cheese prices have recently declined to near
support levels and price support purchases of nonfat dry milk and
cheese are likely during 2006. There were no purchases of dairy
products under the milk price support program in 2005.
Farm Income and Government Payments
In 2004, net farm cash income reached nearly $86 billion, up from
the previous record of $72 billion in 2003. Declining crop prices and
increasing production expenses caused net cash farm income to decline
to $83 billion in 2005. In 2006, the farm economy is pulling back from
the strong crop prices and production levels in 2003 and 2004 and the
record livestock and milk prices of 2004 and 2005. With higher crop
stocks, reduced crop prices, and a modest decline in livestock sector
receipts, the value of 2006 farm marketings is expected to decline
about $7 billion from the last year's near record $239 billion, with
two-thirds of the decline in crops. With further increases in
production expenses and lower government payments, net cash farm income
is forecast to fall to $65 billion in 2006, or about equal to the
previous 10-year average.
In 2005, government payments to producers were a record high $23
billion, up from $13 billion in 2004. In 2005, increased marketing loan
costs aggravated by the marketing system disruption caused by the
hurricanes, increased counter-cyclical payments, ad hoc disaster
assistance, and tobacco program buyout payments all contributed to
higher government payments. Payments to farmers are expected to decline
by $4.5 billion in 2006 due to lower ad hoc disaster payments,
marketing assistance loan outlays, and tobacco buyout payments.
Cash production expenses are expected to rise 4 percent in 2006
following increases of 6 percent in 2005 and 5 percent in 2004. Energy-
related input (fertilizer, lime, fuels, oils, and electricity) and
interest expenses increased by $6.5 billion in 2005 and are expected to
rise by over $4 billion or 10 percent in 2006. For 2006, the Department
of Energy projects that diesel and natural gas will cost another 5
percent more on top of the increases of around 35 percent that these
fuels saw in 2005. Corn, a heavy user of energy for fertilizer,
irrigation and grain drying, can be used to illustrate the impact of
higher energy costs on crop returns. For 2006, energy is expected to
add about 5 cents to national average corn operating costs compared
with a year ago and 23 cents more than 2 years ago. These rising costs
will reduce farm income and have some effect on crop acreage and
production in 2006. This forecast increase in energy expenses assumes
producers will not alter their production methods to reduce energy use
and lower costs, and of course, many will do so.
Net farm income is expected to decline for all major types of crop
and livestock farms and in all production regions. Farm household
income is also expected to decline for the first time in 7 years, but
at over $80,300, would still be 20 percent higher than in 2003 and well
above the average of all U.S. households.
Despite the drop in income and the increase in interest rates, we
project that farm real estate values will rise 6.5 percent in 2006,
down slightly from the 7 percent gain in 2005. Another land value
increase would continue the recent strong improvement in the farm
sector balance sheet. The ratio of real estate value to net cash farm
income, a concept similar to a price-to-earnings ratio, is forecast to
spike up in 2006 to the highest level since the early 1980s. If that
ratio were to stay high over the next few years, it would suggest the
increase in farmland values may not be sustainable. For the last 3
years in a row, farm net worth has gone up by an average of nearly $95
billion per year, which is more than the increase in farm income each
year and much more than the $6 billion annual increase in farm debt.
That is expected to be true again in 2006. Farm net worth, or equity is
now a record high at $1.4 trillion and the debt-to-asset ratio at the
end of 2006 is forecast at 13.1 percent, the lowest in 45 years.
A return to average national farm income, lower enterprise and
regional farm income, lower cash margins, and an increase in farm debt
do not indicate an impending financial crisis in U.S. agriculture. Yet,
they do suggest there is likely to be greater financial stress for an
increasing number of producers. That stress is likely to show up in
tighter credit standards, delayed loan repayments and loan extensions,
and more demand for USDA credit guarantees. The coming year will
present more of a financial challenge for U.S. agriculture than in
recent years. In addition, agriculture will have to contend with
questions over the effect of rising interest rates on the durability of
the U.S. economic recovery, the value of the dollar, issues raised by
the Federal budget deficit, trade negotiations, bird flu, BSE, oil
prices, and terrorism. Producers will likely need to draw more on their
resiliency and managerial capabilities in 2006 than during in the past
couple of years of abnormally high farm income.
That completes my comments and thank you.
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
Senator Bennett. Thank you very much.
Dr. Penn.
STATEMENT OF J.B. PENN
Mr. Penn. Thank you, Mr. Chairman.
I am pleased to be here with you and Senator Kohl again
this year and to present the budget and program proposals for
the Farm and Foreign Agricultural Services mission area. As you
will recall, this mission area is comprised of the Farm Service
Agency, the Risk Management Agency, and the Foreign
Agricultural Service.
The budgets we are discussing today provide the resources
needed to ensure our continued ability to implement our
programs effectively. Although the budget is constrained by the
need to reduce the Federal deficit, it meets our priorities and
ensures our continued efforts on behalf of America's farmers
and ranchers.
I would like to discuss the three agencies and their
budgets individually, beginning first with the Farm Service
Agency (FSA). FSA is the lead agency, as you know, for
delivering farm assistance, and the budget places a priority on
maintaining and enhancing our ability to provide efficient,
responsive services to all producers.
Recently, FSA has faced a series of program implementation
challenges that have required the full commitment of agency
resources. Last year and this year, several new disaster
programs have been implemented. We have had the tobacco buyout
program while continuing administration of the 2002 Farm Bill
programs.
The 2007 budget is designed to ensure the agency's
continued delivery of its services. The budget provides a total
program level for FSA salaries and expenses of nearly $1.4
billion, a net increase of $86 million above 2006. Now this
requested level will support a ceiling of about 5,250 Federal
staff-years and 9,400 non-Federal staff-years, and temporary
staffing will remain at the 2006 levels.
FSA also provides a variety of direct loans and loan
guarantees to farm families who would otherwise be unable to
obtain the credit they need to continue their operations. And
by statute, a substantial portion of the direct loan funds are
reserved each year for assistance to beginning, limited
resource, and socially disadvantaged farmers and ranchers.
The 2007 budget includes funding for about $930 million in
direct loans and $2.5 billion in loan guarantees. This level of
funding is consistent with the actual program use in 2005, and
we believe these proposed loan levels will be sufficient to
meet the demand in 2007.
Turning to the Risk Management Agency (RMA), the Federal
Crop Insurance Program is another part of the strong safety net
that is available to our Nation's agricultural producers. Last
year the crop insurance program provided about $45 billion in
protection on over 246 million acres out of the total crop land
base of about 325 million acres.
We project that for last year, the total indemnity payments
will be about $3.3 billion. And despite all of the droughts and
freezes and floods and hurricanes, that is about the same level
of indemnities that we had in 2004. Our current projection
shows that for the coming year, we will insure about $49
billion worth of product.
For salaries and expenses of RMA, the budget provides $81
million in discretionary spending. That is an increase of $4.5
million from the 2006 level, and this net increase includes
additional funding for information technology (IT) and
increased staff-years to improve our monitoring of the
financial health of the insurance companies.
The budget also includes a proposal to implement a
participation fee to fund IT modernization and maintenance
costs. The fee would be assessed on the insurance companies
that participate in the program and that benefit from the
subsidies paid by the Federal Government.
Finally, let me turn to the Foreign Agricultural Service
(FAS) and our international activities. I am pleased to report
that we have made considerable progress in trade expansion
activities this past year, but challenges remain.
FAS has been very actively involved in supporting all of
the trade negotiations, including the comprehensive World Trade
Organization (WTO) negotiations, but also the several bilateral
and regional free trade negotiations. It has been very actively
involved in reopening the markets closed because of bovine
spongiform encephalopathy (BSE) and other animal and plant
diseases. And the agency continues to work to expand foreign
sales and, at the same time, provide foreign food aid.
The proposed budget provides a program level of $162
million for 2007. That is an increase of $11 million above
2006. This funding is proposed to meet higher overseas
operating costs in the agency's overseas posts, including
increased payments to the Department of State for
administrative services that are provided in the embassies in
which our personnel are posted.
Funding is also included for FAS's contribution to the
Capital Security Cost Sharing Program operated by the State
Department. The budget also includes a small increase for trade
capacity building. This initiative assists developing countries
in adopting policies that meet WTO standards and to adopt
regulatory systems that are transparent and science based and
modeled after ours.
The budget also includes a projected program level of $1.3
billion for the Public Law 480 program, and the budget proposes
that all of the Public Law 480 funding will be through Title II
donations. This reflects our recent experience in which an
increasing share of the foreign food assistance has been
directed to emergency situations, where such aid is critical to
preventing famine and saving lives.
For the McGovern-Dole Food for Education Program, the
budget continues funding at the 2006 level.
So, in conclusion, Mr. Chairman, our 2007 budget and
program proposals provide the resources we need to continue the
important work that these agencies do on behalf of America's
farmers and ranchers.
PREPARED STATEMENTS
We certainly appreciate the support for our mission area
that we have received from this committee in past years, and we
look forward to working with you in the future.
Thank you.
[The statements follow:]
Prepared Statement of J.B. Penn
Mr. Chairman and Members of the Committee, I am pleased to appear
before you this morning to present the 2007 budget and program
proposals for the Farm and Foreign Agriculture Services (FFAS) mission
area of the Department of Agriculture (USDA). The FFAS mission area is
comprised of three agencies: the Farm Service Agency, Risk Management
Agency, and Foreign Agricultural Service.
Statements by the Administrators of the FFAS agencies, which
provide details on their budget and program proposals for 2007, have
already been submitted to the Committee. My statement will summarize
those proposals, after which I will be pleased to respond to any
questions you may have.
Mr. Chairman, the FFAS mission area and the programs it carries out
are critical for meeting three of the Department's strategic
objectives: enhancing the international competitiveness of American
agriculture in order to increase export opportunities; enhancing the
competitiveness and sustainability of the rural and farm economies; and
protecting and enhancing the Nation's natural resource base and
environment. By providing the diverse array of programs offered by our
agencies--price and income support, farm credit assistance,
conservation and environment incentives, risk management tools, and
trade expansion and export promotion programs--we are in the forefront
of efforts to accomplish the Department's mission of service to
American agriculture.
The 2007 President's budget provides the resources needed to ensure
continuation of these diverse activities. Although the budget does
include proposals for savings in both discretionary and mandatory
programs, as part of government-wide efforts to reduce the deficit, it
meets our priorities and ensures our continued efforts on behalf of
America's agricultural producers.
FARM SERVICE AGENCY
The Farm Service Agency (FSA) is the lead agency for delivering
farm assistance. It is the agency that the majority of farmers and
ranchers interact with most frequently. Producers rely on FSA to access
farm programs such as direct and countercyclical payments, commodity
marketing assistance loans, loan deficiency payments, farm ownership
and operating loans, disaster assistance, and certain conservation
programs, such as the Conservation Reserve Program (CRP). Because FSA
is the prime delivery agency for most of the major farm assistance
programs, the budget places a priority on maintaining and enhancing
FSA's ability to provide efficient, responsive services to our
producers.
Farm Program Delivery
FSA has faced a series of program implementation challenges that
have required the full commitment of agency resources. Last year, FSA
implemented the Emergency Hurricane Supplemental Appropriations Act of
2005, which included more than a dozen programs and $2.9 billion for
farmers and ranchers who were affected by drought and other weather-
related problems in 2003 and 2004. FSA also implemented an emergency
relief program, supported with $600 million of section 32 funds, for
Florida's citrus, nursery, and vegetable growers who were affected by
three hurricanes in 2004.
In addition, FSA was required to implement the tobacco buy-out
program during 2005, with very little lead time to prepare. Under the
program, transition payments of about $950 million per year are being
made to tobacco quota holders and producers, ending all elements of the
Federal tobacco price support program effective with the 2005 crop.
Although the emergency supplemental provided some funds to cover
administrative costs of delivering disaster assistance, they were not
sufficient to meet those costs fully. As a result, FSA had to cut
expenses aggressively in all but the most essential areas and was
forced to divert IT resources away from planned modernization to
provide the resources needed to implement these new programs. In 2006,
FSA is again meeting the challenge of delivering disaster assistance to
producers affected by hurricanes in the Gulf Coast states.
In the fall of 2005, FSA reduced permanent staffing through the use
of buy-out authority to adjust staffing due to workload changes
resulting from elimination of the tobacco program and other changes.
Although the demands on FSA's resources have tightened and workload and
staffing needs have shifted, the FSA office structure has remained
stable for several years. FSA now has hundreds of county offices with
three or fewer employees that are increasingly expensive to maintain
and are hard pressed to provide effective customer service. As you
know, the agency terminated its ``FSA Tomorrow'' plan to close and
consolidate county offices, but the need to streamline operations and
office structure continues. FSA has asked its State Executive Directors
to conduct independent, local-level reviews of the offices and
operations in their states. This ongoing effort will follow the
guidelines established in the 2006 Agriculture Appropriations Act with
respect to public meetings, Congressional notification, and
communications with affected producers. This will ensure the most
appropriate adjustments are made, consistent with local needs and
within the constraints of available resources.
The 2007 budget is designed to ensure the agency's diverse efforts
can move forward. It provides a total program level for FSA salaries
and expenses of nearly $1.4 billion, a net increase of $86 million
above 2006. The requested level will support a ceiling of about 5,250
Federal staff years and 9,425 non-Federal staff years. Staff levels
have been reallocated among FSA's program activities to reflect the
decreased workload associated with the tobacco program and other areas.
Permanent Federal staff years will be reduced by 65 and permanent full
time non-Federal county staff years will be reduced by 24, while
temporary staff years will remain at 2006 levels.
FSA is taking other actions designed to improve their services on
behalf of America's producers. Among the most important of these are
information technology (IT) improvements, including the adoption of
web-based applications that allow farmers to sign up for programs, as
well as receive payments, on line. This reduces the paperwork burden
significantly and provides for more timely receipt of payments.
Critical to the success of this endeavor is the need to replace
farm program delivery software now running on FSA's remaining legacy
computer system which is obsolete and incapable of meeting future
needs. In order to complete the transition to the modern web-based
technology system, the budget proposes $14 million for a multi-year
investment in streamlining farm program delivery processes and software
to allow retirement of the legacy system.
Commodity Credit Corporation
Domestic farm commodity price and income support programs are
financed through the Commodity Credit Corporation (CCC), a Government
corporation for which FSA provides operating personnel. CCC also
provides funding for conservation programs, including the CRP and
certain programs administered by the Natural Resources Conservation
Service. In addition, CCC funds most of the export programs
administered by the Foreign Agricultural Service.
In 2005, CCC outlays were relatively high at $20.2 billion due to
recent large crops that have contributed to growing supplies and
weakened prices. CCC outlays are now projected to reach $21.3 billion
in 2006 and $20.2 billion in 2007 under current law, which reflects the
recent enactment of the Agricultural Reconciliation Act of 2005.
In light of the continuing high levels of CCC outlays and the
continuing budget deficit, the President's budget again includes a
number of proposals to reduce the level of farm spending consistent
with the government-wide goal of reducing the Federal deficit. These
proposals are designed to work within the existing structure of the
2002 Farm Bill and achieve savings over the next 10 years. The
proposals, which are spread across the entire agricultural sector,
include reducing commodity payments across the board by 5 percent;
tightening payment limits; lowering dairy program costs; and
reinstituting a 1.2 percent marketing assessment on sugar processors as
well as a 3 cent per hundredweight assessment on milk marketings.
These proposals are expected to save $1.1 billion in 2007 and $7.7
billion over 10 years. The majority of the savings is achieved through
the across-the-board reduction in program payments.
Conservation Programs
The 2002 Farm Bill provided for significant growth in the
Department's conservation programs. The CRP, which is funded by CCC and
administered by FSA, is the Department's largest conservation/
environmental program. The Farm Bill extended CRP enrollment authority
through 2007 and increased the enrollment cap by 2.8 million acres to a
total of 39.2 million acres.
As of January, CRP enrollment totaled 35.9 million acres. The 2007
budget assumes general signups will be held this year and next to
enroll about 2.5 million and 4.9 million acres, respectively. In
addition, a major effort is underway beginning this year to re-enroll
or extend a large number of CRP contracts that will begin expiring over
the 2007-2010 period.
Our current baseline assumptions are that CRP acreage will increase
gradually to 39.2 million acres by 2008 and remain at that level
through 2016.
FARM LOAN PROGRAMS
FSA plays a critical role for our Nation's agricultural producers
by providing a variety of direct loans and loan guarantees to farm
families who would otherwise be unable to obtain the credit they need
to continue their farming operations. By law, a substantial portion of
the direct loan funds are reserved each year for assistance to
beginning, limited resource, and socially disadvantaged farmers and
ranchers. For 2007, 70 percent of direct farm ownership loans are
reserved for beginning farmers and 20 percent are reserved for socially
disadvantaged borrowers, who may also be beginning farmers.
The 2007 budget includes funding for about $930 million in direct
loans and $2.5 billion in guarantees. This level of funding is
consistent with actual program use in 2005, and we believe these
proposed loan levels will be sufficient to meet demand in 2007.
The 2007 budget provides funding of $4 million for the Indian Land
Acquisition program, double the amount provided in 2006. For the Boll
Weevil Eradication loan program, the budget requests $59 million, a
reduction of $41 million from 2006. This reduction is due to the
successful completion of eradication efforts in several areas. The
amount requested is expected to fully fund those eradication programs
operating in 2007.
For emergency disaster loans, no additional funding is requested.
As of January, about $175 million is available for use in 2006, and
sufficient funding is expected to carry forward into 2007 to assist
producers whose farming operations have been damaged by natural
disasters.
RISK MANAGEMENT AGENCY
The Federal crop insurance program represents one of the strongest
safety net programs available to our Nation(s agricultural producers.
It provides risk management tools that are compatible with
international trade commitments, creates products and services that are
market driven, harnesses the strengths of both the public and private
sectors, and reflects the diversity of the agricultural sector.
In 2005, the crop insurance program provided about $45 billion in
protection on over 246 million acres. Our current projection is that
indemnity payments to producers on their 2005 crops will be about $3.3
billion, which is about the same level as in 2004. Our current
projection for 2007 shows a moderate increase in the value of
protection to more than $49 billion. This projection is based on the
Department(s latest estimates of planted acreage and expected changes
in market prices for the major agricultural crops, and assumes that
producer participation remains essentially the same as it was in 2005.
The 2007 budget requests an appropriation of ``such sums as are
necessary'' as mandatory spending for all costs associated with the
program, except for Federal salaries and expenses. This level of
funding will provide the necessary resources to meet program expenses
at whatever level of coverage producers choose to purchase.
The Risk Management Agency (RMA) is making significant progress in
preempting fraud, waste, and abuse through the expanded use of data
mining. RMA has preempted million of dollars' worth of improper
payments and continues to identify ways to reduce program abuse. RMA
continues to use data mining to identify anomalous producer, adjuster,
and agent program results and, with the assistance of FSA offices,
conducts growing season spot checks to ensure that new claims for
losses are legitimate. These spot checks based on data mining have
resulted in a significant reduction in anomalous claims for certain
situations.
Despite the successes of the crop insurance program, more can be
done to improve its effectiveness. One of the overarching goals of the
crop insurance program has been the reduction or elimination of ad hoc
disaster assistance. However, in recent years Congress has passed four
disaster bills covering 6 crop years and costing the government about
$10 billion. Therefore, the budget includes a proposal to link the
purchase of crop insurance to participation in farm programs, such as
the direct and counter-cyclical payment programs. This proposal would
require farm program participants to purchase crop insurance protection
for 50 percent, or higher, of their expected market value or lose their
farm program benefits. This level of coverage is nearly double the
amount of protection currently provided at the catastrophic level.
Additionally, participants in the Federal crop insurance program
would contribute to the President's deficit reduction program. The
budget includes several proposals that would reduce subsidies paid to
producers and approved insurance providers. In total, these changes are
expected to save about $140 million annually beginning in 2008.
Salaries and Expenses
For salaries and expenses of RMA, $81 million in discretionary
spending is proposed, an increase of $4.5 million from the 2006 level
of about $77 million. This net increase includes additional funding for
IT, increased staff years to improve monitoring of the insurance
companies, and pay costs.
The budget also includes a proposal to implement a participation
fee to fund IT modernization and maintenance costs. The fee, of about
one-half cent per dollar of premium, would be assessed on the insurance
companies that participate in the program and benefit from the
subsidies paid by the Federal Government. The fee will be collected
beginning in 2008 and will initially supplement the annual
appropriation to provide for modernization of the IT system. After
modernization is completed, the fee would be shifted to maintenance and
would at that point reduce the discretionary appropriation required by
RMA.
RMA has an aging IT system; the last major overhaul occurred about
12 years ago. At that time, the crop insurance program offered seven
plans of insurance covering roughly 50 crops and providing about $14
billion in protection. In 2005, protection was offered through more
than 20 plans of insurance covering 370 crops, plus livestock and
aquaculture, and providing over $44 billion in protection.
Several major changes also have occurred over the years in the way
producers protect their operations from losses. In 1994, there were no
plans of insurance that offered protection against changes in market
prices. Today, over 50 percent of the covered acreage has revenue
protection and nearly 62 percent of the premium collected is for
revenue based protection. In addition, the Agricultural Risk Protection
Act (ARPA) of 2000 authorized the development of insurance products to
protect livestock. RMA has implemented several new livestock price
protection products. Because livestock production occurs year-round,
these products must be priced and sold in a different manner than
traditional crop insurance. The advent of new types of insurance, not
contemplated when the IT system was designed, has placed tremendous
strain on an aging system.
ARPA also instituted new data reconciliation, data mining, and
other anti-fraud, waste, and abuse activities that require the data to
be used in a variety of new ways. The current IT system was not
designed to handle these types of data operations. Consequently, the
data must be stored in multiple databases which increases data storage
costs and processing times, and increases the risk of data errors.
Finally, I would note that the budget for RMA includes a request
for 15 additional staff years. This increase will provide RMA with the
additional resources necessary to improve oversight and internal
controls of the insurance providers. In 2002, American Growers', the
Nation's largest crop insurance company, failed. RMA, in concert with
the Nebraska Department of Insurance, did a tremendous job of ensuring
that both the producers' and the Government's interests were protected,
indemnities paid, and policies transferred to other insurance
providers. The additional staffing will help to ensure that a similar
failure does not occur in the future.
FOREIGN AGRICULTURAL SERVICE
I would now like to turn to the international programs and
activities of the FFAS mission area. One of the goals that Secretary
Johanns has established for the Department is to enhance the
international competitiveness of American agriculture in order to
provide increased export opportunities for our farmers and ranchers.
The FFAS mission area is a primary contributor to that goal through
activities that expand and maintain opportunities for U.S. agricultural
exports; enhance the global sanitary and phytosanitary system to
facilitate agricultural trade; and support international economic
development and trade capacity building.
We made noteworthy progress in our export expansion activities
during the past year. During fiscal year 2005, the value of U.S.
agricultural exports was once again at a record level, and we are
presently on course to set another record--$64.5 billion--during fiscal
year 2006.
One of our highest priorities this past year was working to achieve
an agreement on reform of agricultural trading practices in the Doha
Round of multilateral trade negotiations. Last fall, the United States
tabled an ambitious proposal to advance the negotiations that we
believe provides the basis for their successful conclusion. Although
the ambition of our proposal has not been matched by others, Members of
the World Trade Organization (WTO) have agreed to reach agreement on
the modalities (i.e., reduction formulas and methodologies) for a final
agreement by the end of April, and we are working diligently to achieve
that goal. We have a tremendous opportunity to achieve significant
reforms in this Round, and we are committed to achieving a successful
outcome that will provide new and meaningful opportunities for export
growth in future years.
Regional and bilateral trade agreements are another, very important
avenue for opening new markets. Just last month, the President
announced that South Korea and the United States intend to negotiate a
bilateral free trade agreement that will offer significant
opportunities for increased sales of U.S. food and agricultural
products in what is already our sixth largest overseas market. In
addition, we have recently completed free trade negotiations with Peru,
Colombia, and Oman and are continuing negotiations with an array of
other countries that are expected to provide new opportunities for U.S.
agricultural sales.
One of our other very important priorities during the past year has
been our efforts to recover access to overseas markets for U.S. beef
that were closed following the discovery of bovine spongiform
encephalopathy (BSE) in the United States in 2003. Despite our recent
setback with Japan in this regard, we have made significant progress.
To date, we have regained at least partial access to 28 markets (not
including Japan). Restarting shipments to Japan is now of paramount
importance. We are confident the steps Secretary Johanns has directed
be implemented in response to recent developments in Japan lay the
groundwork for resumption of sales there. The Department has provided a
full report on this matter to Japan, and we will continue to engage our
Japanese counterparts to achieve our objective of resuming sales in
near future.
Salaries and Expenses
The Foreign Agricultural Service (FAS) is the lead agency for the
Department's international activities and is in the forefront of our
efforts to expand and preserve overseas markets. Through its network of
77 overseas offices and its headquarters staff here in Washington, FAS
carries out a wide variety of activities that contribute to the
objective of providing increased export opportunities for our
agricultural products.
During the past year, FAS has continued to review its activities
and operations in order to ensure that it is structured appropriately
to address priority issues that will characterize global agriculture in
the 21st century. As a result of the agency's review, FAS has increased
its focus on inherently governmental functions such as trade
negotiations, enforcement of trade agreements, and strategic management
of country relationships. In response to the increased importance of
sanitary and phytosanitary issues for trade, FAS has stepped up its
monitoring and enforcement activities and increased its efforts through
international standard-setting bodies to support the development of
science-based regulatory systems. It also has increased its emphasis on
trade capacity building activities that facilitate achievement of the
U.S. trade agenda.
With trade of such critical importance to the future health and
vitality of American agriculture, it is imperative that FAS have the
resources needed to continue to represent and advocate for American
agriculture on a global basis and to open new markets overseas. The
budget provides a program level of $162 million for FAS in 2007, an
increase of $11 million above 2006. This includes funding to meet
higher overseas operating costs at the agency's overseas posts,
including increased payments to the Department of State for
administrative services provided at overseas posts.
Funding is also included for FAS' contribution to the Capital
Security Cost Sharing Program. Under that program, agencies with an
overseas presence in U.S. diplomatic facilities are contributing a
proportionate share of the construction of new, safe U.S. diplomatic
facilities over a 14-year period.
The budget also includes funding to support a new Trade Capacity
Building initiative that supports U.S. trade policy objectives. By
assisting developing countries to adopt policies that meet WTO
standards and regulatory systems that are transparent and science-
based, we will improve access for U.S. products to their markets. At
the same time, by enhancing their ability to benefit from trade, we
encourage them to become more forthcoming and supportive in market
access negotiations. As their ability to participate in and benefit
from global trade is improved, they will become better markets for U.S.
agricultural exports.
International Food Assistance
The United States continues to provide leadership in global efforts
to provide humanitarian relief and promote economic development through
foreign food assistance. Emergency needs for food assistance remain at
high levels, particularly in sub-Saharan Africa. To help meet those
needs, the supplemental appropriations package submitted by the
President on February 16th includes a request for $350 million to
support additional Public Law 480 Title II food donations. This funding
will be used to respond to humanitarian food aid needs in the Darfur
region of Sudan, including for refugees in neighboring Chad; other
regions of Sudan; and other areas facing critical food situations,
including those in East and Central Africa.
For 2007, the budget continues our support for these efforts by
providing an overall program level of nearly $1.6 billion for U.S.
foreign food assistance activities.
For the Public Law 480 program, the budget includes a projected
program level of $1.3 billion. This includes $1.2 billion of
appropriated funding requested in the budget, plus projected
reimbursements from the Maritime Administration for prior year cargo
preference related expenses. The budget proposes that all funding for
Public Law 480 will be provided through Title II donations in 2007 and,
therefore, includes no new funding for additional Title I concessional
credit or grant programs.
This proposal reflects the experience of recent years in which an
increasing share of U.S. foreign food assistance has been directed to
emergency situations in which food aid is critical to preventing famine
and saving lives. At the same time, demand for food assistance provided
through concessional credit has declined significantly. This year, only
two government-to-government agreements are expected to be signed.
The budget also proposes that the Administrator of the Agency for
International Development have the authority in emergency situations to
use up to 25 percent of Title II funding to purchase commodities in
locations closer to where they are needed. This authority is intended
to expedite the response to emergencies overseas by allowing food aid
commodities to be purchased more quickly and closer to their final
destination, while increasing the total amount of commodities that can
be procured to meet those emergencies. It is important to emphasize
that U.S. commodities will continue to play the primary role in U.S.
foreign food aid purchases and will be the first choice for meeting
global needs. Furthermore, with this authority commodities would be
purchased from developing countries that are eligible for official
development assistance and not from developed countries, such as the
European Union.
For the McGovern-Dole International Food for Education and Child
Nutrition Program, the budget continues funding at the 2006 level. With
the conclusion of 2005 programming, this program and its predecessor,
the Global Food for Education Initiative, will have provided assistance
to more than 10 million children, mothers, and infants throughout the
world. Particularly noteworthy, this assistance has helped establish
sustainable programs in four countries--Kyrgystan, Lebanon, Moldova,
and Vietnam--where parents and local governments have assumed
responsibility for continuing the feeding programs, allowing United
States support to be ended.
The budget also includes an estimated program level of $161 million
for the CCC-funded Food for Progress program, which supports the
adoption of free enterprise reforms in the agricultural economies of
developing countries.
Export Promotion and Market Development Programs
FAS administers the Department's export promotion and market
development programs that play an important role in our efforts to
enhance the international competitiveness of American agriculture.
The CCC export credit guarantee programs provide payment guarantees
for the commercial financing of U.S. agricultural exports. The
guarantees facilitate exports to buyers in countries where credit is
necessary to maintain or increase U.S. sales. For 2007, the budget
projects a program level of nearly $3.2 billion for CCC export credit
guarantees.
For the Department's market development programs, including the
Market Access Program and Foreign Market Development Program, the
budget includes funding of $148 million. This level reflects a proposal
to limit the Market Access Program to $100 million in 2007, which is
intended to achieve savings in mandatory spending and contribute to
government-wide deficit reduction efforts.
The budget also includes $35 million for the Dairy Export Incentive
Program and $28 million for the Export Enhancement Program.
Trade Adjustment Assistance
For the Trade Adjustment Assistance (TAA) for Farmers Program, the
budget includes $90 million, as authorized by the Trade Act of 2002.
The program provides assistance to producers of raw agricultural
commodities, who have suffered lower prices due to import competition,
and to fishermen who compete with imported aquaculture products. In
order to qualify for assistance, the price received by producers of a
specified commodity during the most recent marketing year must be less
than 80 percent of the national average price during the previous 5
marketing years. In addition, a determination must be made that
increases in imports of like or competitive products ``contributed
importantly'' to the decline in prices.
During 2005, 14 petitions for TAA were approved, including 9 that
were recertified for a second year of assistance. Commodities that were
approved for assistance included Pacific salmon, shrimp, lychees,
California black olives, Idaho potatoes, and Concord juice grapes.
Total program costs for 2005 were approximately $21 million.
The deadline for submission of petitions for 2006 TAA closed on
January 31. To date, TAA petitions have been certified for producers of
Florida avocados and Indiana snapdragons. Additional petitions are
under review, and decisions on their eligibility should be announced in
the near future.
That concludes my statement, Mr. Chairman. I would be pleased to
answer any questions that you and other Members of the Committee may
have.
______
Prepared Statement of Teresa C. Lasseter, Administrator, Farm Service
Agency
Mr. Chairman and Members of the Subcommittee, I appreciate the
opportunity to appear before you for the first time as Administrator of
the Farm Service Agency (FSA). I have taken the helm at a challenging
moment for FSA--a moment when the agency is at a crossroads. As things
currently stand, we are faced with a choice between delivering programs
to the best of our ability using current methods, or modernizing the
agency in terms of structure and technology to respond more quickly to
new legislation, provide better access to our programs and data for our
customers and business partners, and more efficiently implement a 2007
Farm Bill. Our fiscal year 2007 budget request provides a fiscally
responsible approach which addresses these agency priorities while also
doing our part to restrain discretionary spending to help reduce the
deficit. Before I begin discussing the details of the budget, I would
like to comment on how we arrived at our current position, provide a
status of some of our current initiatives and challenges, and solicit
your support and partnership for approval of this budget request.
Office Structure
As competition and accountability for limited resources continue to
increase, we want to ensure we are still providing our customers with
the efficient, accurate and timely service they deserve. Quite frankly,
FSA as presently structured must change in order to best serve our
customers. There have been numerous program changes over the past few
years as well as improvements in technology that have shifted our
workload. Also, reductions in the number of employees in the past 3
years require that we adjust our present structure. As you know, we set
aside our FSA tomorrow plan and stopped all actions on county office
restructuring and office closures under that plan. Many of our State
Executive Directors, however, are experiencing extreme difficulty in
providing services due to the increased number of offices that have two
or fewer employees in them, and the increasing number of managers who
are responsible for more than one county and must divide their time
between two or more offices.
At present we have 36 offices that have no permanent employees in
them, 144 offices with only one employee, 372 offices with 2 employees,
and 266 offices that share a manager. Providing a full range of
services to our customers full-time is impossible in these offices. We
must reorganize, modernize and streamline this agency from the bottom
up. We must reinvent FSA on a technological platform that feels more
like 2006 than 1980. Having set aside the national FSA Tomorrow plan,
and in accordance with your guidance, we have asked our State offices
for a full review of their technology, training, staffing and
facilities. We know that we need widespread technology upgrades. We
know that we need to provide our people with better training. We know
that absent our ability to hire more employees, temporaries and
contractors, we need technology to streamline our operations to
increase productivity.
FSA's State Executive Directors (SEDs) will conduct independent,
local-level reviews of the efficiency and effectiveness of the FSA
office structure in each State. SEDs and State committees will form
review committees to identify what the optimum network of FSA
facilities, staffing, training, and technology should be in each State
within existing budgetary resources and staffing ceilings. Furthermore,
SEDs will also explore potential joint-effort opportunities with the
Natural Resources Conservation Service and other Department of
Agriculture agencies.
As recommendations are received from each State, FSA's Deputy
Administrator for Field Operations will review and validate the
proposed changes. After the recommendations are shared with the
affected Congressional delegations, the agency will hold public
hearings and coordinate communications efforts with area farmers,
ranchers, and stakeholders.
We will faithfully follow your instructions as outlined in Public
Law 109-97. If State offices recommend that any of our offices be
closed or consolidated, we will hold public hearings within 30 days and
notify Congress of all impending changes within 120 days.
Administrative Budget Trends
Congress has provided an increase in the appropriations for our
Salaries and Expenses (S&E) account each year, and we appreciate the
support of the Committee reflected in those numbers. At the same time,
however, operational costs such as pay costs, information technology
infrastructure and legacy systems, rents, and utilities have been
increasing at a faster pace. The President's Budgets have taken this
reality into account in the requested levels. However, for the past 3
years the enacted appropriations for S&E together with the FSA
component of the Common Computing Environment account have averaged
about 3.8 percent below the budget request. In addition, during fiscal
year 2005, FSA implemented the newly enacted Tobacco Buyout Program
under the American Jobs Creation Act of 2004 and disaster programs for
2003, 2004, and 2005 crop losses as directed by the Military
Construction Appropriation and Emergency Hurricane Supplemental
Appropriations Act, 2005. It is estimated that these programs cost the
Agency a minimum of $26 million to administer.
These effective reductions in the agency resource level have been
addressed through aggressive cost-cutting measures. For example, FSA
reduced discretionary non-information technology (IT) expenses such as
travel, equipment and supplies by 39.5 percent from fiscal year 2003
levels. FSA also deferred and realigned investment funding intended for
modernization of IT systems in order to fund uncontrollable increases
in non-discretionary IT and non-IT expenses. FSA successfully carried
out its new programs at the expense of its modernization progress. In
addition, Federal and non-Federal permanent staffing ceilings were
reduced by 5 percent and 3 percent from fiscal year 2003 to fiscal year
2005.
Mr. Chairman, we in FSA have always considered ourselves a ``can-
do'' agency. That is why in recent years we have told an optimistic
story even while facing resource challenges. And that is why it is
difficult to come before you sounding a less optimistic note today. The
time has passed, however, when we can promise to do more with less. The
time has come when we must make some difficult choices. This brings me
back to the crossroads I mentioned earlier: do we direct our resources
to maintaining the status quo as nearly as possible to focus on near-
term program delivery? Or do we make the investments needed for future
program delivery, which would divert resources from current activities?
Even with your support for the President's budget, we must work with
our stakeholders on an acceptable office consolidation plan to ensure
we are providing our customers with the quality service they are
entitled to.
Our restructuring plan is not limited to our county offices but
will involve a comprehensive review of the organization and operations
at all levels of the agency, including State and national offices. We
need to wisely invest in our employees, technology and equipment. With
the 2007 requested level for both our Salaries and Expenses and the
Common Computing Environment accounts, we can achieve this by providing
critical training to our employees, upgrading computer systems,
networks and software, and modernizing local office equipment. With
over 45 percent of FSA offices staffed with three or fewer people, IT
modernization has become significantly more important.
Employee Buyout Program
During first quarter of fiscal year 2006, we conducted two employee
buyout programs, commonly known as the Voluntary Separation Incentive
Program (VSIP) or ``buyouts'' and the Voluntary Early Retirement
Authority (VERA) or ``early outs''. A total of 424 Federal and non-
Federal employees were separated from FSA with buyout payments of up to
$25,000. Several factors influenced our decision to request VSIP and
VERA authority, including legislative changes ending the tobacco
program, a transfer of the bulk of the administrative activity FSA
previously performed for the Natural Resources Conservation Service
(NRCS) on the Environmental Quality Incentives Program back to NRCS in
fiscal year 2005, and shifts in program participation in certain States
causing workload decreases in those States and a resulting staffing
imbalance. As a result, reductions to staffing levels could be absorbed
at the affected locations, without severely impacting their ability to
deliver ongoing programs. The buyouts resulted in a 3-percent reduction
in FSA permanent staffing levels. Through the use of buyout/early out
authority we were able to more efficiently align ourselves within
existing resources and begin to right-size in an employee friendly
manner without the need for a reduction-in-force. In partnership with
stakeholders, implementation of a comprehensive agency-wide
restructuring plan will enable us to address our remaining workforce
right-sizing challenges.
Disaster Assistance
The past 2 years have presented producers with tremendous
challenges from Mother Nature, with record rainfall in parts of the
country, a pervasive drought in the West, and the worst hurricane
season in decades. The Emergency Supplemental Appropriations to Address
Hurricanes in the Gulf of Mexico and Pandemic Influenza Act, 2006
(Public Law 109-148) included $404 million for the Emergency Forestry
Conservation Reserve Program, which will provide assistance for farmers
and ranchers who have suffered forestry damage directly related to
hurricanes Katrina, Ophelia, Rita, Dennis and Wilma. FSA anticipates
publishing the rule and issuing software by late winter, and holding a
2006 signup in the spring. In addition, $199.8 million was designated
for the Emergency Conservation Program (ECP). The language of the
Supplemental Appropriations Bill provides for assistance with
restoration of activities such as oyster operations not normally
covered by ECP. Therefore, new regulations are required to make certain
that new practices are developed that achieve the goals of the program
while ensuring program integrity. We expect ECP regulations to be
published soon, with signups anticipated in early spring.
In addition, Secretary Johanns authorized $250 million for crop
disaster, livestock, dairy, tree and aquaculture assistance. These
funds are authorized under Section 32 of the Agricultural Act of August
24, 1935, which allows the Secretary to restore producers' purchasing
power. These funds will be distributed by way of five new programs: the
Tree Indemnity Program (TIP), the Livestock Indemnity Program (LIP),
the Feed Indemnity Program (FIP), the Hurricane Indemnity Program
(HIP), and an Aquaculture Block Grant program. The Secretary announced
these programs on January 26, 2006. For TIP, LIP, FIP, and HIP, interim
final regulations are in final clearance, and signups will begin in
late June. For the Aquaculture Program, memorandums of understanding
will be sent to the States in early March.
Prior to the President's signing of the Emergency Supplemental
Appropriations Bill, FSA made more than $30 million in Emergency
Conservation Program assistance available to agricultural producers
suffering damage from Hurricane Katrina. In addition, USDA's Commodity
Credit Corporation implemented immediate changes to its Marketing
Assistance Loan Program to allow producers to obtain loans for on-farm
grain storage on the ground in addition to grain bins and other
normally approved structures.
Tobacco Transition Program
FSA has expeditiously implemented the provisions of the ``The Fair
and Equitable Tobacco Reform Act,'' otherwise know as the ``tobacco
buyout'' program which was part of the American Jobs Creation Act of
2004, signed by the President on October 22, 2004. The Act terminated
the tobacco quota and price support program of more than 65 years,
which had restricted production and kept domestically produced tobacco
prices high. The program allows producers and quota owners to sign up
for 10 years of transition payments to ease the economic adjustment
process.
As of December 20, 2005, the Commodity Credit Corporation (CCC) had
approved 382,972 quota holder contracts valued at $6.6 billion, and
181,696 producer contracts valued at $2.9 billion. CCC disbursed fiscal
year 2005 payments to 563,770 contracts holders, valued at $945.9
million.
On October 17, 2005, CCC implemented the successor-in-interest
provision of the Tobacco Transition Payment Program or TTPP. The
successor-in-interest program allows contract holders to transfer their
remaining contract rights in full to a third party in return for a
lump-sum payment. As of December 2, 2005, 89,885 quota holder and
producer contracts valued at $1.5 billion were sold to lump-sum
providers. There are over 60 financial institutions participating in
the successor-in-interest program.
As of February 28, 2006, approximately $934.6 million had been
disbursed for fiscal year 2006 TTPP payments. County offices will
continue to disburse payments through March. Contracts requiring a
correction for over- or under-payments have been delayed. The
correction software is complex and deployment is targeted for late
April.
BUDGET REQUESTS
Turning now to the specifics of the 2007 Budget, I would like to
highlight our proposals for the commodity and conservation programs
funded by the Commodity Credit Corporation (CCC); the farm loan
programs of the Agricultural Credit Insurance Fund; our other
appropriated programs; and administrative support.
COMMODITY CREDIT CORPORATION
Domestic farm commodity price and income support programs are
administered by FSA and financed through the CCC, a government
corporation for which FSA provides operating personnel. Commodity
support operations for corn, barley, oats, grain sorghum, wheat and
wheat products, soybeans, minor oilseed crops, upland cotton and extra
long staple cotton, rice, milk and milk products, honey, peanuts, pulse
crops, sugar, wool and mohair are facilitated primarily through loans,
payment programs, and purchase programs.
The 2002 Farm Bill authorizes CCC to transfer funds to various
agencies for authorized programs in fiscal years 2002 through 2007. It
is anticipated that in fiscal year 2006, $1.797 billion will be
transferred to other agencies.
The CCC is also the source of funding for the Conservation Reserve
Program administered by FSA, as well as many of the conservation
programs administered by the Natural Resources Conservation Service. In
addition, CCC funds many of the export programs administered by the
Foreign Agricultural Service.
Program Outlays
The fiscal year 2007 budget estimates largely reflect supply and
demand assumptions for the 2006 crop, based on November 2005 data. CCC
net expenditures for fiscal year 2007 under current law are estimated
at $20.2 billion, down about $1.1 billion from $21.3 billion in fiscal
year 2006. If the President's proposals for farm program savings are
enacted, CCC outlays would decline by an additional $1.1 billion in
fiscal year 2007.
This net decrease in projected expenditures is attributable to
decreases for crop, tree and livestock disaster payments, tobacco
payments, loan deficiency payments, and the Noninsured Assistance
Program, partially offset by an increase in counter-cyclical payments.
Reimbursement for Realized Losses
CCC is authorized to replenish its borrowing authority, as needed,
through annual appropriations up to the amount of realized losses
recorded in CCC's financial statements at the end of the preceding
fiscal year. For fiscal year 2005 losses, CCC was reimbursed $25.4
billion in fiscal year 2006.
Conservation Reserve Program
The Conservation Reserve Program (CRP), administered by FSA, is
currently USDA's largest conservation/environmental program. For 20
years it has cost-effectively assisted farm owners and operators in
conserving and improving soil, water, air, and wildlife resources by
converting highly erodible and other environmentally sensitive acreage,
normally devoted to the production of agricultural commodities, to a
long-term resource-conserving cover. CRP participants enroll acreage
for 10 to 15 years in exchange for annual rental payments as well as
cost-share assistance and technical assistance to install approved
conservation practices.
The 2002 Farm Bill increased authorized enrollment under this
program from 36.4 million acres to 39.2 million acres. Under the fiscal
year 2005 continuous and Farmable Wetlands Program (FWP) signups, a
combined total of 387,000 acres was enrolled. We issued incentive
payments totaling approximately $76 million in fiscal year 2005 under
continuous signup, Conservation Reserve Enhancement Program (CREP), and
FWP under the incentives program that began in May 2000 to boost
continuous signup participation. As of January 2006, total CRP
enrollment is 35.9 million acres, nearly 92 percent of the 39.2 million
acres authorized under the Farm Bill.
The CREP is also a major initiative under CRP that seeks to address
recognized environmental issues of States, Tribes, and the Nation. CREP
is a voluntary program implemented through Memoranda of Agreement with
partners, such as States, Federal agencies, and private groups. FSA
currently has 34 CREP agreements with 27 States with over 2 million
acres reserved for enrollment. The program is very popular with
environmental and wildlife groups, in addition to States and private
landowners. More than 772,000 acres are currently enrolled in CREP
nationwide. Most recently, in July 2005, FSA launched a new CREP
project in Indiana.
No general signup was held in fiscal year 2005. However, the fiscal
year 2007 budget assumes general signups in fiscal years 2006 and 2007
to enroll approximately 2.5 million acres and 4.9 million acres,
respectively. In fiscal years 2006 and 2007, we anticipate enrolling
410,000 acres and 774,000 acres under continuous signup and the CREP.
About 40,000 acres are estimated to be enrolled in the FWP in fiscal
year 2006 and 40,000 acres in fiscal year 2007. Additionally, the
fiscal year 2007 budget assumes early re-enrollments and extensions of
fiscal year 2007-2010 expiring contracts. Overall, CRP enrollment is
assumed to gradually increase from 35 million acres at the end of
fiscal year 2005 to 39.2 million acres by fiscal year 2008, and to
remain at 39.2 million acres through fiscal year 2016, maintaining a
reserve sufficient to provide for continuous signup and CREP.
FARM LOAN PROGRAMS
The loan programs funded through the Agricultural Credit Insurance
Fund provide a variety of loans and loan guarantees to farm families
who would otherwise be unable to obtain the credit they need to
continue their farming operations.
The fiscal year 2007 Budget proposes a total program level of about
$3.5 billion. Of this total, approximately $1 billion is requested for
direct loans and nearly $2.5 billion for guaranteed loans offered in
cooperation with private lenders. These levels should be sufficient to
provide adequate funding throughout the year. While the total request
is below the amounts provided by Congress in fiscal year 2005 and 2006,
it is nearly $500 million above the amount actually obligated in fiscal
year 2005.
For direct farm ownership loans we are requesting a loan level of
$223 million. The proposed program level would enable FSA to extend
credit to about 1,921 small and beginning farmers to purchase or
maintain a family farm. In accordance with legislative authorities, FSA
has established annual county-by-county participation targets for
members of socially disadvantaged groups based on demographic data.
Also, 70 percent of direct farm ownership loans are reserved for
beginning farmers, and historically about 35 percent are made at
reduced interest rates to limited resource borrowers, who may also be
beginning farmers. Recently, however, the reduced-rate provisions have
not been utilized since regular interest rates are lower than the
reduced rates provided by law. For direct farm operating loans we are
requesting a program level of $644 million to provide approximately
14,525 loans to family farmers.
For guaranteed farm ownership loans in fiscal year 2007, we are
requesting a loan level of $1.2 billion. This program level will
provide about 4,600 farmers the opportunity to acquire their own farm
or to preserve an existing one. One critical use of guaranteed farm
ownership loans is to allow real estate equity to be used to
restructure short-term debt into more favorable long-term rates. For
guaranteed farm operating loans we propose a fiscal year 2007 program
level of approximately $1.3 billion to assist nearly 7,800 producers in
financing their farming operations. This program enables private
lenders to extend credit to farm customers who otherwise would not
qualify for commercial loans and ultimately be forced to seek direct
loans from FSA.
In addition, our budget proposes program levels of $4 million for
Indian tribe land acquisition loans and $60 million for boll weevil
eradication loans. For emergency disaster loans, our budget does not
request any new appropriation; anticipated carryover funding will
support a program level of approximately $70 million, which should
provide sufficient credit to producers whose farming operations are
damaged by natural disasters.
The 2007 budget request reflects the Administration's proposed
increase in the fees producers pay to secure guaranteed farm ownership
or guaranteed unsubsidized farm operating loans. This change will bring
the fees for these loans more in line with the fees charged to secure
other types of guaranteed loans. This proposal will be implemented
through the rulemaking process and is expected to save about $30
million annually.
OTHER APPROPRIATED PROGRAMS
State Mediation Grants
State Mediation Grants assist States in developing programs to deal
with disputes involving a variety of agricultural issues including
distressed farm loans, wetland determinations, conservation compliance,
program payment eligibility, and others. Operated primarily by State
universities or departments of agriculture, the program provides
neutral mediators to assist producers--primarily small farmers--in
resolving disputes before they culminate in litigation or bankruptcy.
States with mediation programs certified by FSA may request grants of
up to 70 percent of the cost of operating their programs.
For fiscal year 2006, grants have been issued to 32 States. Two
additional States are expected to become certified during the fiscal
year. For fiscal year 2007, we anticipate that the requested $4.2
million will provide grants to 34 States and seed funding for 2 new
States.
Emergency Conservation Program
Since it is impossible to predict natural disasters, it is
difficult to forecast an appropriate funding level for the Emergency
Conservation Program, and in recent years the program has been funded
through supplemental appropriations. During fiscal year 2005 Congress
provided $150 million for the program to assist producers in repairing
damage caused by natural disasters. For fiscal year 2006, as I
mentioned earlier, the program received supplemental funding of $199.8
million specifically for hurricane damage to the Gulf States. On March
3, $63 million of the $199.8 million was allocated. The eligible States
have requested a total of $374 million. Nationwide, as of March 3,
$20.6 million is pending allocation to 28 States, and $4.8 million has
already been allocated, for recovery from various disasters utilizing
funds carried forward from fiscal year 2005 together with recoveries of
unused prior allocations. As of March 3, $5.1 million is available for
allocation nationwide. The fiscal year 2007 Budget proposal does not
include funding for this program.
Dairy Indemnity Program
The Dairy Indemnity Program (DIP) compensates dairy farmers and
manufacturers who, through no fault of their own, suffer income losses
on milk or milk products removed from commercial markets due to
residues of certain chemicals or other toxic substances. Payees are
required to reimburse the Government if they recover their losses
through other sources, such as litigation. As of March 1 we have paid
fiscal year 2006 DIP claims totaling $44,000 in 3 States.
The fiscal year 2007 appropriation request of $100,000, together
with unobligated carryover funds expected to be available at the end of
fiscal year 2006, would cover a higher than normal, but not
catastrophic, level of claims. Extended through 2007 by the 2002 Farm
Bill, DIP is a potentially important element in the financial safety
net for dairy producers in the event of a serious contamination
incident.
Grassroots Source Water Protection Program
The Grassroots Source Water Protection Program (GSWPP) is a joint
project by the Farm Service Agency and the nonprofit National Rural
Water Association (NRWA) designed to help prevent surface and ground
water pollution through voluntary practices installed by producers at
the local level. With the fiscal year 2006 appropriations of $3.7
million, the NRWA is hiring a rural source water technician in each of
the 36 participating States to work with FSA State and county directors
as well as State conservation specialists to develop water protection
plans within priority watersheds.
Legislative authority for the GSWPP will expire September 30, 2007.
The budget requests no funding for this program.
ADMINISTRATIVE SUPPORT
The costs of administering all FSA activities are funded by a
consolidated Salaries and Expenses account. The account comprises
direct appropriations, transfers from loan programs under credit reform
procedures, user fees, and advances and reimbursements from various
sources.
The fiscal year 2007 Budget requests $1.41 billion from
appropriated sources including credit reform transfers, for a net
increase of about $86 million over the fiscal year 2006 level. The
request reflects increases in pay-related costs to sustain essential
program delivery and increases in information technology investments.
The request would fund IT operational expenses, technical analysis and
design documentation of the Modernize and Innovate the Delivery of
Agricultural Systems (MIDAS) program, and development and enhancements
necessary to support legacy IT systems and maintain current IT
operations during the transition to Web-based systems. It would also
shift to the S&E account certain costs previously included in the
Common Computing Environment (CCE) account, such as the Universal
Telecommunications Network and enterprise licensing. These increases
are offset by decreases in both Federal and non-Federal county office
staff years and operating expenses.
As I have already noted, FSA has taken aggressive action over the
past 3 years to reduce discretionary administrative expenditures and
live within available funding. In conjunction with this effort, the
employee buyout/early out program I mentioned earlier yielded a
reduction of 143 Federal and 281 non-Federal staff-years for fiscal
year 2006. The fiscal year 2007 request reflects a total of 5,253
Federal staff-years and 9,425 non-Federal staff-years, representing
decreases of 65 and 24 staff-years, respectively, from the fiscal year
2006 levels. Temporary non-Federal county staff-years will remain at
the fiscal year 2006 level of 650.
I would like to emphasize the importance of the support of FSA's
modernization effort that is provided through the Department's CCE
account. Funding made available to FSA under this account will provide
needed telecommunications improvements and permit us to continue
implementation of GIS, which is so crucial to rapid and accurate
program delivery. If this source of funding were not available, the
additional costs would have to be covered by FSA's S&E account.
Mr. Chairman, this concludes my statement. I will be happy to
answer your questions and those of the other Subcommittee Members.
______
Prepared Statement of A. Ellen Terpstra, Administrator, Foreign
Agricultural Service
Mr. Chairman, Members of the Subcommittee, I appreciate the
opportunity to review the work of the Foreign Agricultural Service
(FAS) and to present the President's budget request for FAS programs
for fiscal year 2007.
INTRODUCTION
FAS is a small agency with a big mission: working to expand and
maintain international export opportunities for U.S. agricultural, fish
and forestry products; supporting international economic development
through trade capacity building and sustainable development practices;
and supporting the adoption and application of science-based Sanitary
and Phytosanitary (SPS) regulations to facilitate agricultural trade.
In addition to our Washington-based staff, the Agency maintains a
network of overseas offices that provide critical market and policy
intelligence to support our strategic goals, respond quickly in cases
of market disruption, and represent U.S. agriculture in consultations
with foreign governments.
To meet new international challenges, FAS has refined the three
functions essential to our mission--market access, intelligence, and
analysis; trade development; and agricultural development for national
security. While the first two functions represent the historic
activities of the Agency, the third reflects new tasks that we have
identified as essential to support U.S. agriculture and broader U.S.
Government policy goals.
In addition, we have developed a new strategic focus for the
Agency. We are placing a greater priority on inherently governmental
functions such as trade negotiations, enforcement of trade agreements,
and strategic management of country relationships. We have increased
our emphasis on SPS issues by stepping up our monitoring and
enforcement activities and increasing efforts to work through
international standard-setting bodies to support the development of
science-based regulatory systems. We are placing greater emphasis on
trade capacity building activities that are in line with the
President's trade agenda, and we are shifting from implementing
individual development activities to coordinating USDA international
activities.
Market Access, Intelligence, and Analysis
Our core objective continues to be the expansion and maintenance of
overseas market opportunities for U.S. agriculture. If we are to help
U.S. food and agricultural exporters build on three consecutive years
of record export sales, expanding market opportunities will be vital
for America's food and agricultural sector. We all recognize the United
States is a mature market, while around the world we see emerging
markets with rapidly growing middle classes.
Our primary tool to expand access is the negotiation of new
bilateral, regional, and multilateral trade agreements that lower
tariffs and reduce trade impediments. FAS provides the critical
analysis and policy advice to ensure U.S. agriculture achieves
substantial benefits in these negotiations.
Over the past several years, maintaining existing market access has
grown in importance. We monitor foreign compliance with trade
agreements, analyze trade issues, and coordinate with other trade and
regulatory agencies to develop effective strategies to avoid or reverse
trade-disruptive actions. We also use the extensive expertise within
USDA to pursue solutions to difficult technical issues that restrict
trade, such as those related to bovine spongiform encephalopathy (BSE)
and biotechnology or those that create barriers to trade, such as
sanitary and phytosanitary or food safety regulations. We have
increased our efforts to ensure that more trading partners use science-
based regulatory systems and follow international guidelines in order
to reduce the number of technical problems and non-science based
policies that hinder trade. We also work with the Office of the U.S.
Trade Representative to ensure trade agreements are enforced through
formal dispute mechanisms, when necessary.
Trade Development
Our trade development function includes price/credit risk
mitigation and market development programs that support U.S. firms and
industries in their efforts to build and maintain overseas markets for
U.S. agricultural products. The price/credit risk mitigation programs
include the GSM-102 Export Credit Guarantee Program, the Supplier
Credit Guarantee Program and the Facility Guarantee Program.
FAS administers two major market development programs--the Foreign
Market Development (Cooperator) and Market Access Programs. These are
carried out chiefly in cooperation with non-profit agricultural trade
associations and private firms. Several smaller programs--Technical
Assistance for Specialty Crops (TASC) and the Quality Samples Program
(QSP)--also provide financial and technical support to U.S. exporters.
Agricultural Development for National Security
President Bush's National Security Strategy recognizes
international economic development, along with defense and diplomacy,
as one of the three pillars of U.S. foreign and national security
policy. The Strategy recognizes that the lack of economic development,
particularly in fragile and strategic countries and regions, results in
economic and political instability, which can pose a national security
threat to the United States. For most developing countries, a
productive and sustainable agricultural sector and open markets are the
key elements for economic growth.
FAS deploys USDA's unique resources and expertise in agricultural
development activities to promote market- and science-based policies
and institutions, and sustainable agricultural systems. One way that
USDA helps developing countries increase trade and integrate their
agricultural sectors in the global economy is to improve regulatory
frameworks. Promoting productivity-enhancing technologies that will
help increase food security is also a priority. In addition, we support
agricultural reconstruction in post-conflict or post-disaster countries
or regions such as in Afghanistan.
MAJOR ACTIVITIES AND GOALS
In 2005, FAS was a key contributor to the bold U.S. agriculture
proposal that has been credited with providing new impetus to the Doha
Development Agenda of the World Trade Organization (WTO) negotiations.
While much work needs to be done to bring the negotiations to a
successful conclusion, we believe that the Hong Kong Ministerial
Declaration laid a solid foundation for the final phase of the
negotiations. Later this week, Secretary Johanns will participate in a
Ministerial meeting in London. Ministers will be working to narrow
differences in order to meet the April target for defining modalities.
In preparation for and follow-up to the Hong Kong Ministerial, FAS
actively worked to convince developing countries, particularly cotton-
producing African countries, of the benefits of trade to their economic
growth. In addition, FAS conducted several technical assistance
programs to help improve those countries' ability to trade. These
efforts played a key role in helping move the Doha trade talks forward.
Last year saw Congressional ratification of the Central America-
Dominican Republic-United States Free Trade Agreement. FAS worked in
tandem with the Office of the United States Trade Representative (USTR)
on the development, analysis and negotiation needed to bring the
agreement to completion. When implemented, it will provide U.S.
exporters improved access to 40 million consumers with growing incomes.
In 2005, we worked to recover trade lost as a result of the finding
of BSE in the United States when 51 markets closed their borders to our
products. I am pleased to report that we have regained at least partial
access to 26 (not including Japan) of these markets for beef and beef
products, representing 45 percent of our 2003 export value. Momentum in
reopening export markets for U.S. beef gained considerably since Japan
announced on December 12, 2005, that it was resuming imports of U.S.
beef. Hong Kong, Korea, Taiwan, and Singapore all agreed to open to
boneless beef. In addition, Mexico announced the lifting of its import
ban on U.S. bone-in beef. These openings represented market access
gains of 82 percent of our 2003 export value for beef and beef products
(includes Japan). Unfortunately, as you know, Japan ($1.4 billion
market) has since closed its market due to the finding of vertebral
column in a few boxes of a U.S. veal shipment, reducing our regained
market access to $2.5 billion. We continue to work on regaining
Japanese confidence in U.S. beef and our ability to meet Japan's import
requirements.
We successfully defended U.S. export market access in a number of
countries. In the European Union (EU), our intervention delayed the
implementation of debarking requirements for wood packaging materials.
This ensured continued smooth trade in U.S. exports packed in or on
wood packaging materials. That trade is valued at nearly $80 billion
annually. With the help of our industry partners, we were able to
preserve $300 million in corn gluten feed exports to the EU.
Through our monitoring and enforcement of the WTO Sanitary and
Phytosanitary Agreement, we reviewed over 600 foreign SPS regulations
and took direct action against 40 that were inconsistent with U.S.
regulations or did not comply with the WTO Agreement. Our successes
with India and China are particularly noteworthy. As a result of our
efforts, India relaxed import requirements that could have blocked U.S.
shipments of almonds, pulses, and horticultural products. Almond
shipments, the top U.S. agricultural export to India, increased from
$95 million to $118 million, and U.S. sales of pulses grew from
$500,000 to over $3 million in 1 year. Our actions caused China to
change its import regulations on meat, wine, spirits and fresh fruit.
U.S. exports of these products grew from $142 million to $252 million.
FAS has worked aggressively to recover, maintain and expand markets
for U.S. farm products that have been produced with agricultural
biotechnology. A high priority is assisting other countries in their
efforts to develop, safely regulate, and begin using this important
tool to reduce hunger and alleviate poverty. For example, for the past
2 years, the United States has aggressively pursued a WTO case against
the EU's moratorium on agricultural biotechnology, which has cost U.S.
producers of corn and related products, hundreds of millions of dollars
each year. In addition, FAS leads U.S. efforts to work with like-minded
countries to assure that international rules and regulations for
agricultural biotechnology are science-based and implemented in
transparent and predictable ways.
As in the case of the EU's biotechnology moratorium, when we are
unable to resolve problems bilaterally, we have used the WTO dispute
settlement mechanism to advance our trade objectives. In 2005, we were
successful in cases with Japan on fire blight in apples and with Mexico
on rice and high-fructose corn syrup.
Just as we look to the WTO to enforce our complaints against
trading partners, we must also live up to WTO decisions that raise
questions about U.S. programs. After the WTO decision in the Brazil
cotton case, we were able to revise our export credit guarantee
programs to comply with the deadline imposed by the WTO. Officials of
several developing countries have complimented the United States on our
efforts to bring our export credit guarantee programs in line with the
WTO decision. Of course, we also recognize the important role that the
Congress has played in working with the Administration to address these
critical issues. We appreciate that Congress recently approved
legislation including repeal of the Continued Dumping and Subsidy
Offset Act--the Byrd Amendment--and the Step 2 cotton program. Both
programs were ruled inconsistent with our WTO obligations. This action
demonstrates that the United States intends to live up to our WTO
commitments.
In the area of trade development, we launched several e-gov
initiatives to improve electronic access to key programs to meet
requirements of the President's Management Agenda. We launched a new
electronic registration system for the export credit guarantee programs
that allows U.S. exporters to quickly register sales via the Internet.
We are implementing a streamlined, integrated process to manage grant
applications.
Our projects to promote agricultural development took us to many
countries. We participated in post-conflict reconstruction efforts in
Afghanistan by sending 26 USDA advisors to nine provinces to assist
with livestock management, irrigation methods, and rudimentary food
safety procedures. We expanded trade capacity building and technical
assistance efforts in Armenia, Algeria, Malawi and Yemen. We worked
with African countries to help them develop the institutional capacity
to expand their exports and to regulate imports according to principles
of sound science. We placed pest risk assessment advisors in the trade
hubs sponsored by the U.S. Agency for International Development, and we
are training 200 people from 35 countries on a wide variety of sanitary
and phytosanitary issues. We hosted an Avian Influenza Conference last
summer for the Asian Pacific Economic Cooperation (APEC) forum that was
attended by more than 100 officials from the 21 APEC economies.
Under the Cochran Fellowship Program, we provided short-term
training for nearly 500 participants from 81 countries. Cochran
participants meet with U.S. agribusiness, attend policy and food safety
seminars, and receive technical training related to market development
and trade capacity building. Under the Borlaug Fellows program,
launched in 2004, 120 researchers, policymakers and university staff
received short-term scientific training and research opportunities at
U.S. colleges and universities.
Our food aid programs have helped millions of hungry people around
the world. For example, under the McGovern-Dole International Food for
Education and Child Nutrition Program, a record 3.4 million children
and mothers benefited from our 2005 programming efforts.
In 2006, our goals include bringing the multilateral trade talks to
a successful conclusion, working to complete the outstanding bilateral
free trade agreements with the United Arab Emirates, Peru, Panama and
Thailand, launching new negotiations with Korea, and monitoring
existing agreements. We also will continue our efforts to ensure that
more trade partners use science-based regulatory systems and follow
international guidelines, particularly regarding BSE and products from
agricultural biotechnology. Our trade capacity activities will be used
to support all these efforts. We will continue the process to realign
our overseas staff to meet the changing world trading environment,
focusing on Asia.
BUDGET REQUEST
Mr. Chairman, our fiscal year 2007 budget proposes a funding level
of $162.5 million for FAS and 974 staff years, an increase of $11.0
million above the fiscal year 2006 level. The budget has been developed
to ensure the agency's continued ability to conduct its full array of
activities and provide services to U.S. agriculture.
The budget proposes an increase of $7.4 million to meet higher
operating costs at FAS overseas offices. The FAS network of 77 overseas
offices covering over 130 countries is vulnerable to macro-economic
events and developments that are beyond the agency's control but which
must be met if FAS' overseas presence is to be maintained.
Specifically, these increases include:
--$3.4 million for wage and price increases to meet higher operating
costs at overseas offices. Declines in the value of the U.S.
dollar, coupled with overseas inflation and rising wage rates,
have led to sharply higher operating costs that must be
accommodated in order to maintain our current overseas
presence.
--$1.1 million for increased payments to Department of State (DOS)
for International Cooperative Administrative Support Services
(ICASS). The DOS provides overseas administrative support for
foreign affairs agencies through the ICASS system. FAS has no
administrative staff overseas, and thus relies entirely on DOS/
ICASS for this support.
--$2.9 million for the Capital Security Cost Share program
assessment. In fiscal year 2005, DOS implemented a program
through which all agencies with an overseas presence in U.S.
diplomatic facilities pay a proportionate share for accelerated
construction of new secure, safe, and functional diplomatic
facilities. These costs are allocated annually based on the
number of authorized personnel positions. This plan is designed
to generate a total of $17.5 billion to fund 150 new facilities
over a 14-year period. The FAS assessment will increase
annually in roughly $3 million increments until fiscal year
2009 to total annual assessed level of $12 million. This level
is assumed to remain constant at that point for the ensuing 9
years.
The budget also requests $1.5 million in support of the President's
trade policy agenda for Trade Capacity Building. One of the challenges
we face is obtaining the dedicated funding that can be used throughout
the Department in support of this initiative. Through technical
assistance, training, and related activities, this initiative will
support U.S. trade policy objectives on a proactive basis by assisting
developing countries to adopt scientifically sound health and safety
standards that will enable U.S. exporters to take advantage of
negotiated market access. It will also strengthen their ability to
participate in, and benefit from, the global trading arena and,
thereby, enhance opportunities for U.S. agricultural exports.
Successful Free Trade Agreement (FTA) implementation requires that
market access issues based on SPS problems be resolved, otherwise the
benefits of the FTA are not realized by either side. In this regard,
FAS works closely with USDA agencies, such as APHIS and FSIS, and the
Food and Drug Administration. Obtaining a dedicated source of funding
will lay the foundation for more effective resolution of ongoing and
emergent SPS market access issues without recourse to time-consuming
and costly dispute resolution procedures.
Finally, the budget includes an increase of $2.1 million to cover
higher personnel compensation costs associated with the anticipated
fiscal year 2007 pay raise. Without sufficient funding, absorption of
these costs in fiscal year 2007 would primarily come from reductions in
agency personnel levels that will significantly affect FAS efforts to
address market access for U.S. food and agricultural exports.
EXPORT PROGRAMS
Mr. Chairman, the fiscal year 2007 budget proposes approximately $4
billion for programs administered by FAS designed to promote U.S.
agricultural exports, develop long-term markets overseas, and foster
economic growth in developing countries.
Export Credit Guarantee Programs
The budget includes a projected overall program level of $3.2
billion for export credit guarantees in fiscal year 2007. Under these
programs, the Commodity Credit Corporation (CCC) provides payment
guarantees for the commercial financing of U.S. agricultural exports.
Last year, we announced changes to these programs to comply with the
WTO cotton decision in a dispute with Brazil. We implemented a risk-
based fee structure for the GSM-102 and Supplier Credit Guarantee
Programs. Fee rates are now based on the country risk that CCC is
undertaking, as well as the repayment term and repayment frequency
under the guarantee. We also suspended operation of the GSM-103
program, effective July 1, 2005, in response to a WTO dispute panel
decision. In addition, USDA proposed legislative changes to the cotton
and export credit programs. Congress passed legislation to repeal the
Step 2 Program and the repeal will take effect on August 1, 2006.
As in previous years, the budget estimates reflect actual levels of
sales expected to be registered under the programs and include:
--$2.5 billion for the GSM-102 program;
--$602 million for Supplier Credit guarantees; and
--$30 million for Facility Financing guarantees.
The fiscal year 2005, the GSM-102 program provided credit
guarantees which facilitated sales of approximately $2.2 billion of
U.S. agricultural exports to 8 countries and 6 regions. In fiscal year
2005, the Supplier Credit Guarantee Program (SCGP) registered
approximately $455 million in credit guarantees which facilitated sales
of over $700 million to 9 countries and 8 regions. USDA has also
undertaken a top-to-bottom review of the Supplier Credit Guarantee
Program. Most recently, USDA announced an Advanced Notice of Proposed
Rulemaking on the SCGP and invited suggestions on changes that would
improve program operations and efficiency. Several factors are behind
the effort to improve program operations. As the SCGP has grown,
defaults have also increased. Although CCC has improved its claims
recovery process, further changes may be necessary. The comment period
closed in late February and USDA is reviewing the comments.
Market Development Programs
Funded by CCC, FAS administers a number of programs to promote the
development, maintenance, and expansion of commercial export markets
for U.S. agricultural commodities and products. For fiscal year 2007,
the CCC estimates include a total of $148 million for the market
development programs, $100 million below the fiscal year 2006 level and
includes:
--$100 million for the Market Access Program;
--$34.5 million for the Foreign Market Development (Cooperator)
Program;
--$10 million for the Emerging Markets Program;
--$2.5 million for the Quality Samples Program; and
--$2 million for the Technical Assistance for Specialty Crops
Program.
The lower program level for these activities reflects a proposal to
limit funding for the Market Access Program to $100 million in fiscal
year 2007, which is intended to achieve savings in mandatory spending
and contribute to government-wide deficit reduction efforts.
International Food Assistance
The United States continues to play a leading role in providing
international food aid. In this regard, the fiscal year 2007 budget
includes an overall program level for U.S. foreign food assistance of
$1.6 billion consisting of:
--$1.3 billion for Public Law 480 which is expected to provide
approximately 2.2 million metric tons of commodity assistance.
The budget proposes that all Public Law 480 food assistance be
provided through the Title II donations program in fiscal year
2007, which is administered by the U.S. Agency for
International Development. In recent years, there has been
significant decline in demand for food assistance provided
through concessional credit financing, accordingly, no funding
is requested for Title I credit sales and grants. The budget
includes an appropriation request of $1.2 billion for Public
Law 480 Title II, an increase of $80 million over the 2006
enacted level, and proposes a new provision that will allow up
to 25 percent of the funding to be used to purchase commodities
locally in emergency situations thereby saving more lives.
--$161 million for the CCC-funded Food for Progress Program. Funding
at that level is expected to support 300,000 metric tons of
commodity assistance.
--$103 million for the McGovern-Dole International Food for Education
and Child Nutrition Program. This comprises $99 million in
appropriations and an estimated $4 million in reimbursements
from the Maritime Administration. Funding at this program level
will assist an estimated 2.5 million women and children through
the donation of nearly 80,000 metric tons of commodities.
Export Subsidy Programs
FAS administers two export subsidy programs through which payments
are made to exporters of U.S. agricultural commodities to enable them
to be price competitive in overseas markets where competitor countries
are subsidizing sales. These include:
--$28 million for the Export Enhancement Program (EEP). World supply
and demand conditions have limited EEP programming in recent
years and therefore, the budget assumes a limited program level
for 2007. However, the 2002 Farm Bill does include a maximum
annual EEP program level of $478 million which could be
utilized should market conditions warrant reactivation of the
awarding of bonuses.
--$35 million for the Dairy Export Incentive Program (DEIP), $33
million above the fiscal year 2006 estimate of $2 million. This
estimate reflects the level of subsidy expected to be required
to facilitate export sales consistent with projected United
States and world market conditions. The actual level of bonuses
awarded may change during the programming year as market
conditions warrant.
Trade Adjustment Assistance for Farmers
Authorized by the Trade Act of 2002, the Trade Adjustment
Assistance Program for Farmers authorizes USDA to make payments of up
to $90 million annually to members of eligible producer groups when the
current year's price of an eligible agricultural commodity is less than
80 percent of the national average price for the 5 marketing years
preceding the most recent marketing year, and the Secretary determines
that imports have contributed importantly to the decline in price.
This concludes my statement, Mr. Chairman. I will be pleased to
answer any questions.
______
Prepared Statement of Eldon Gould, Administrator, Risk Management
Agency
Mr. Chairman and members of the Subcommittee, I am pleased to
present the fiscal year 2007 budget for the Risk Management Agency
(RMA). Although this budget was developed by my predecessor, I have
been fully briefed on the funding issues facing RMA and I support the
funding level requested in this budget submission.
One of my principle goals is to make the crop insurance program
more efficient so farmers can be less reliant on ad hoc disaster
payments. When I accepted this position, Secretary Johanns charged me
with administering the crop insurance program in a timely and farmer-
friendly manner. I take this charge very seriously; cooperation and
unity between the Government and our reinsured partners are necessary
to meet our common goals of providing effective insurance products,
processing timely and accurate claims when losses occur and identifying
and eliminating waste, fraud and abuse in the program to the greatest
extinct possible. In addition, effective outreach to our stakeholders
and customers is necessary to identify attributes of the program that
are working well and the aspects that need to be changed to improve
efficiency and effectiveness. Administration of the crop insurance
program requires all interested parties working together to identify
viable insurance products and solutions that meet farmer/rancher needs
of the agricultural community. Moreover, if the program is to continue
to be successful, the checks and balances necessary to guard against
the risks of fraud, waste and abuse need strengthening.
The Federal Crop Insurance Corporation continues to improve the
economic stability of agriculture through a sound system of crop
insurance, in paying out approximately $3.3 billion in losses in fiscal
year 2005. Overall, the program provided farmers with more than $44
billion in protection on about 246 million acres with a participation
rate of about 80 percent (principal crops). In order to maintain and go
beyond our current participation rate, while at the same time reducing
the expectation of ad hoc disaster payments when bad weather or natural
disasters strike, a strategy that compels the purchase of crop
insurance must be implemented.
The 2007 budget supports more than $49 billion in protection on
approximately 286 million acres through about 1.2 million policies. The
appropriations required for this level of risk protection is $4.2
billion, which includes program administration, product evaluation and
program oversight, as well as premium subsidies, administrative
expenses reimbursements, and payments for excess losses estimated above
the mandated loss ratio of 1.075. The funding level proposed for the
Federal Crop Insurance Corporation (FCIC) Fund is $4.1 billion and for
the Administrative and Operating Expenses, $80.8 million.
FCIC FUND
The fiscal year 2007 budget proposes that ``such sums as may be
necessary'' be appropriated to the FCIC Fund. This ensures the program
is fully funded to meet the contractual obligation to pay claims, to
reimburse for expenses incurred in delivering insurance to farmers and
ranchers, and to provide premium subsidies to make crop insurance
affordable. Of the total funding requested for the FCIC budget, 66
percent is for premium subsidies. This level of subsidy is necessary to
maintain participation in the program and to encourage producers to
purchase higher levels of coverage.
To make the crop insurance program more efficient and to reduce the
reliance on ad hoc disaster payments, the 2007 budget includes a
proposal to encourage producers to purchase more adequate crop
insurance coverage by linking direct payments or any other Federal
payment for crops to the purchase of crop insurance. This change will
ensure farmer's revenue loss would not be greater than 50 percent.
Other changes include making catastrophic coverage more equitable in
its treatment of both large and small farms, restructuring premium
rates to better reflect historical losses, and reductions in delivery
costs. Essentially, the majority of producers will have crop insurance
and the minimum coverage level will be sufficient to support the
producers when losses occur. The estimated savings to the program is
$140 million beginning in 2008. This proposal will be submitted along
with the other mandatory proposals for farm programs that support the
President's Budget.
The FCIC budget estimates are $2.7 billion for premium subsidy,
$940.3 million for delivery expenses, $379.8 million for estimated
excess losses, and $74.5 million for Agricultural Risk Protection Act
of 2000 (ARPA) initiatives. With the exception of ARPA initiatives,
these estimates are based on program indicators derived from USDA's
latest projections of planted acreage and expected market prices.
administrative and operating expenses (a&o)
RMA's fiscal year 2007 request of $80.8 million for Administrative
and Operating Expenses represents a base of $76.3 million, which
includes $3.6 million for data mining, and an increase of about $4.5
million from fiscal year 2006. The increase includes funding for an
increase in Compliance staffing, $1.3 million; improving monitoring of
the insurance companies, $1.0 million; pay costs, $1.2 million; and
information technology costs of $1.0 million.
The 2007 budget requests $1.3 million to support an increase of 15
staff years. This will raise RMA's employment ceiling from 553 to 568.
The 15 staff years will support the increased workload for the
Compliance function to provide the staffing to address outstanding OIG
and GAO recommendations to improve oversight and internal controls over
insurance providers. In response to several OIG audit reports, RMA
needs to improve the process of auditing insurance providers to detect
and correct vulnerabilities to proactively prevent improper payment of
indemnities. The additional staffing will provide the necessary
oversight to ensure taxpayers' funds are expended as intended.
Also included in the 2007 budget is $1.0 million to expand the
monitoring and evaluation of reinsured companies. RMA is requesting
funds to establish a process of monitoring, evaluating, and auditing,
on an annual basis, the performance of the product delivery system.
These funds will be used to support insurance company expense audits,
performance management audits and reinsurance portfolio evaluations to
ensure effective internal and management controls are in place and
operating for each reinsured company's business operations.
An increase of $1.2 million is requested for pay costs. These funds
are necessary to maintain required staffing to carry out RMA's mission
and mandated requirements.
Lastly, an increase of $1.0 million is requested for immediate IT
requirements that will support patch-work enhancements to the existing
IT system. If RMA is to continue to pay out billions of dollars in
indemnity payments, it is prudent and necessary to have a current and
reliable operating system to deliver the crop insurance program. To
effectively manage a $4 billion crop insurance program, a modernized IT
system is necessary to replace RMA's core IT operating system that is
over 12 years old.
In light of that, an additional legislative proposal in the 2007
budget is being offered to require the reinsured companies to share in
the cost to develop and maintain a new IT system. The companies would
be assessed a fee based on one-half cent per dollar of premium sold.
The fee is estimated to generate an amount not to exceed $15 million
annually. After the IT system has been developed, the assessment would
be shifted to maintenance and would be expected to reduce the annual
appropriation of the salaries and expenses account of the agency.
PROGRAM MANAGEMENT
The following is an update on accomplishments and events in 2005
regarding key initiatives, activities and products:
--FCIC Board Activities
--Reinsurance
--Hurricane Crop Losses
--Pilot Programs
--Product Development
--Education and Outreach Program
--Agricultural Management Assistance
--Program Integrity
The FCIC Board of Directors consists of 10 members. The Board
receives, reviews, and approves policies and plans of insurance and
other related materials for reinsurance, risk subsidy, and
administrative and operating subsidy. During 2005, the Board considered
62 action items during eight board meetings. The actions included 6
expert reviews, 23 program revisions and modifications, 10 new program
submissions, and 23 corporate administrative items.
Reinsurance
Currently, there are 16 approved insurance providers. Recent
entrants into the crop insurance program include: Austin Mutual
Insurance Company and its managing general agent (MGA), Crop USA;
Westfield Insurance Company and its MGA, John Deere Risk Protection,
Inc., and Stonington Insurance Company and its MGA, Agro National, LLC.
The new Standard Reinsurance Agreement has been put in place, effective
beginning the 2005 crop year.
During 2005, RMA published a proposed rule for premium reduction
plans (PRP). The PRP authorizes a company to pass confirmable cost
savings to insured in the form of premium reductions. After a 60-day
comment period, an interim final rule was published. Currently, nine
insurance providers are eligible to offer a premium reduction plan for
the 2006 reinsurance year. However, due to a provision in the 2006
appropriations act, the PRP will not be available for the 2007
reinsurance year which begins July 1, 2006.
Hurricane Crop Losses
Like other Federal agencies, RMA had a role in responding to
victims of last years' hurricanes. When Wilma, Katrina and Rita hit the
southeast and Gulf Coast areas, RMA's delivery system was available to
respond to the crop losses ensuring the timely disbursement of
payments. In addition, the Agency put in place emergency loss
procedures to help producers who were subject to cancellation or
termination dates for indebtedness or unpaid premium. This change
allowed producers who might have become ineligible for the 2006 crop
year to have additional time to either make payment of the premium due
or execute a payment agreement with the approved insurance provider.
This primarily impacted about 1,500 crop insurance policies that earned
premium mostly on nursery, wheat, sugarcane, and oat crops. An
estimated 500-600 insured producers were impacted. The following are
the current 2005 loss estimates of the hurricanes:
----------------------------------------------------------------------------------------------------------------
Hurricane States Impacted Liability Estimated Losses
----------------------------------------------------------------------------------------------------------------
Wilma...................................... Florida...................... $1,196,400,000 $194,000,000
Katrina.................................... Alabama, Florida, 525,710,000 129,709,000
Mississippi, Louisiana.
Rita....................................... Arkansas, Louisiana, Texas... 130,183,00 15,447,000
-------------------------------------
Total................................ ............................. 1,852,293,000 339,156,000
----------------------------------------------------------------------------------------------------------------
Pilot Programs
RMA has 26 active pilot programs in various phases of development.
The pilot programs for crop year 2005 are Adjusted Gross Revenue (AGR)
and AGR-Lite, apple pilot quality option, avocado actual production
history, avocado revenue, avocado/mango trees, cabbage, cherries,
citrus (dollar), coverage enhancement option, cultivated clams,
cultivated wild rice, Florida fruit trees, forage seed, fresh market
beans, the Income Protection plan of insurance, mint, mustard, onion,
pilot stage removal option, processing chile peppers, processing
cucumbers, rangeland, raspberry/blackberry, strawberries, sweet
potatoes, and winter squash/pumpkins. After about three to five years
of experience, pilot program evaluations are performed to determine
whether the plans of insurance should be converted to permanent
programs and offered in counties where the crop is routinely grown.
During 2005, RMA completed evaluations on eight pilot programs
including: cherries, chile peppers, California citrus, processing
cucumbers, strawberries, winter squash, AGR and avocado revenue. After
consideration by the FCIC Board, winter squash and processed cucumbers
were terminated; cherries, chile peppers, and California citrus were
continued as pilots until the 2006 crop year; and strawberries extended
through the 2008 crop year. Consideration of the evaluations of AGR and
avocado revenue pilots will come before the Board in the 2006 fiscal
year.
Product Development
In January 2006, the FCIC Board approved two new pilots, pasture
range and forage programs set to begin for the 2007 crop year. These
are group-risk programs, one using a temperature adjusted normalized
difference vegetative index and the other a rainfall index program. The
programs will be piloted in different States and areas with sales
beginning this fall. In addition, RMA plans to seek expert review of a
third proposal this spring in an attempt to create viable products for
commodities representing over 550 million acres.
Education and Outreach Program
A total of $4.4 million was distributed for education and outreach
projects with State departments of agriculture, universities and non-
profit organizations. As a result, crop insurance education was
provided to producers in Connecticut, Delaware, Maine, Pennsylvania,
Rhode Island, Maryland, Massachusetts, Nevada, New Hampshire, New
Jersey, New York, Utah, Vermont, West Virginia and Wyoming. These
educational projects will promote risk management education
opportunities by informing agribusiness leaders about new trends in
risk management and by delivering risk management training to producers
with an added emphasis on reaching small farmers.
Similar to last year, RMA awarded 40 commodity partnership
agreements at a cost of $5.5 million. These agreements will provide
outreach to specialty crop producers to broaden their risk management
education. In addition, RMA also directs education and outreach efforts
toward women, small, and limited resource farmers, and ranchers. In
2005, 63 outreach projects were funded at a cost of $7 million. RMA
continues to partner with community-based organizations such as 1862,
1890, and 1994 land grant colleges, universities, as well as, with
Hispanic serving institutions to provide technical assistance and risk
management education on managing farming risks.
Agricultural Management Assistance
In 2005, RMA provided $4.1 million in financial assistance to
producers purchasing spring buy-up crop insurance policies in 15
targeted States. The primary goal of the program is to encourage
producers to purchase higher levels of coverage, and to provide an
incentive for new producers to enter the program. In 2005, RMA paid up
to 15 percent of producers' out-of-pocket premium costs to encourage
increased participation.
Program Integrity
RMA, the Farm Service Agency (FSA), and the reinsured companies
continue to improve program compliance and integrity through: (l) data
reconciliation and matching of disaster program payments; (2)
evaluating and amending procedures for referring potential crop
insurance errors or abuse between FSA and RMA; and (3) creating anti-
fraud distance learning training packages as required by Agricultural
Risk Protection Act of 2000. Compliance managers have increased efforts
to integrate new data mining projects to improve program results and
are exploring ways to expedite processing of sanctions requests.
The efforts of FSA and the results from the data mining and
analysis tools have greatly improved the referral activity to and from
RMA. As a result, from the period of January to December, 2004, an
estimated $71 million reduction in program costs has been identified by
preventing or deferring unsubstantiated claims.
Currently, to manage the referral activity and the responsibilities
of data reconciliation RMA has dealt with the added workload by
increasing emphasis on data management and computer based resources.
But the workload continues to create a challenge for Compliance to
accomplish current activities along with new requirements mandated by
ARPA without the benefit of additional resources. Therefore, the fiscal
year 2007 budget includes 15 additional staff years for Compliance to
strengthen the front-end reviews of approved insurance providers and to
address outstanding recommendations to improve oversight and internal
controls over insurance providers.
CONCLUSION
RMA is faced with many challenges to make the crop insurance
program more efficient and effective. But along with these challenges
come opportunities to provide more meaningful insurance products and
tools, ensure a first-rate delivery system and the opportunity to
verify and validate that the program is solvent and administered with
integrity. I look forward to working with our stakeholders to make this
program even better than it is today. However, the improvements require
the resources requested in the 2007 budget along with passage of the
proposed legislations.
Mr. Chairman, this concludes my statement. I will be pleased to
answer any questions.
Senator Bennett. Thank you, sir.
Mr. Rey.
STATEMENT OF MARK REY
Mr. Rey. Thank you, Mr. Chairman and Senator Kohl.
I am pleased to appear before you today to present the
fiscal year 2007 budget and program proposals for the Natural
Resources Conservation Service (NRCS).
Overall, for fiscal year 2007, the President's budget
recommends a record $4 billion in mandatory funding to expand
participation in Farm Bill conservation programs throughout the
department. Proposals in the 2007 budget will produce savings
in both the mandatory and discretionary accounts. These savings
will enable the administration to target funding based on
resource needs and program results.
The 2007 budget request for the Natural Resources
Conservation Service provides $2.8 billion in total funding,
with $788.6 million in discretionary funding and $2 billion in
mandatory funding, including $1 billion for the Environmental
Quality Incentives Program.
Also, on the mandatory side, the budget request includes an
increase of $153 million for the Wetlands Reserve Program to
enroll an additional 250,000 acres in fiscal year 2007. This
represents a total investment of $402 million for the Wetlands
Reserve Program and will bring the total acreage enrolled in
the program to more than 2.2 million acres.
The Wetlands Reserve Program is the principal supporting
program for the President's Wetlands Initiative to restore,
protect, and enhance 3 million acres of wetlands over a 5-year
period that began in June 2004. The Wetlands Reserve Program
contributes roughly one third of all of the acres included in
the President's initiative.
The appropriations request includes $634.3 million for the
Conservation Technical Assistance Program, the base
conservation program that enables NRCS to successfully
implement Farm Bill conservation programs. In past testimony,
the department has discussed the excellent score NRCS received
in the measure of customer satisfaction for conservation
assistance.
Today, I am pleased to announce that we are releasing a new
report from the American Customer Satisfaction Index, conducted
by the University of Michigan, that gives NRCS an overall score
of 76 out of 100 for administering the Conservation Security
Program (CSP). This score for CSP is considerably higher than
the 2005 national average of 71 for other Federal Government
programs.
We are very proud of the results of this survey, as it
highlights our commitment to quality customer service. In
addition, we have continued to make strides in streamlining our
operations as well. We are striving to keep the administration
of conservation programs as efficient and as lean as possible.
This year alone, we have streamlined program forms to make
them more consistent among like programs, such as the easement
programs. We have consolidated program manuals where possible.
We have established a process for rapid watershed assessments
to provide initial estimates of where conservation investments
can best address resource concerns, and we have instituted
programmatic reforms, such as a pilot sign-up process for
conservation planning and technical assistance.
We are also preparing for the future with a new strategic
plan that charts the agency's future over the next 10 to 20
years. The plan introduced a new mission statement--``helping
people help the land.''
This mission and the accompanying vision statement affirm
the agency's commitment to assist private land owners and
solidify the essential connection between working agricultural
lands and sustaining a healthy environment.
PREPARED STATEMENTS
In summary, I believe that the administration's fiscal year
2007 budget request reflects sound policy and provides solid
support for the vital mission of voluntary conservation on
private lands.
Thank you very much.
[The statements follow:]
Prepared Statement of Mark Rey
Mr. Chairman and members of the Subcommittee, I am pleased to
appear before you today to present the fiscal year 2007 budget and
program proposals for the Natural Resources Conservation Service (NRCS)
of the Department of Agriculture (USDA). I am grateful to the Chairman
and members of this Subcommittee for the ongoing support of private
lands voluntary conservation and the protection of soil, water, and
other natural resources.
Farmers, ranchers, and other private landowners across America play
a vital role in conserving our Nation's soil, water, air, and wildlife
resources, while producing abundant food and fiber. More than 70 years
of ``helping people help the land'' gives NRCS a firm foundation to
meet the challenge of balancing production agriculture with resource
conservation. For fiscal year 2007, the President's Budget meets that
challenge by recommending a record $4 billion in mandatory funding to
expand participation in Farm Bill conservation programs.
PRESIDENT'S FISCAL YEAR 2007 BUDGET
The President's fiscal year 2007 budget request for NRCS provides
resources for the ongoing mission of NRCS, while ensuring that new
challenges faced by landowners can be addressed.
Because of the overriding need to reduce the deficit, NRCS, like
every Federal agency, will share in the responsibility of controlling
Federal spending. There are proposals in the fiscal year 2007 Budget
that will produce savings in both the mandatory and discretionary
accounts. These savings will enable the Administration to target
funding based on need and program results.
With that said, the President's fiscal year 2007 budget request for
NRCS recognizes the vital role that natural resource conservation plays
in securing America's national security. Without productive soil, clean
water and air, and farmers and ranchers who can make a living off the
land, the United States would not be the strong Nation it is today.
The fiscal year 2007 budget request for NRCS provides $2.8 billion
in total funding, with $788.6 million in discretionary funding, and $2
billion in mandatory funding, including $1 billion for the
Environmental Quality Incentives Program.
Also on the mandatory side, the Budget request includes an increase
of $153 million for the Wetlands Reserve Program (WRP) to enroll and
additional 250,000 acres. This represents an investment of $402 million
for WRP, and will bring the total acreage enrolled in the program to
more than 2.2 million acres.
WRP is the principal supporter of the President's Wetlands
Initiative to restore, protect, and enhance 3 million acres of wetlands
over a 5 year period that will begin in June 2004. WRP also contributes
roughly one-third of all the acres toward the goals of the President's
Wetlands Initiative.
The appropriation request includes $634.3 million for the
Conservation Technical Assistance (CTA) Program, which is the base
program that supports the Department's conservation efforts with State
and local entities, and the basic conservation planning and decision
support needed to successfully implement Farm Bill conservation
programs.
BUILDING STRONG ACCOUNTABILITY MEASURES
In the current budget environment, it is more important than ever
to continue working diligently on accountability and results
measurement for the funds provided by Congress. Mr. Chairman, I am
proud of the great strides NRCS has made in the past year on this
effort as well as on making NRCS information more accessible to
farmers, ranchers, and the general public. NRCS has taken bold steps to
address all the challenges identified as a result of the Office of
Management and Budget's Program Assessment Rating Tool (PART) scores
for various conservation programs. PART reviews have been completed for
12 NRCS programs. The Agency has used these assessments to develop
long-term outcome based performance measures and to become even more
results oriented.
Meeting the President's Management Agenda is critical to all of us
at USDA. Linking program requirements and program allocations to
performance and accountability measures helps both the Administration
and Congress make the most informed budget decisions.
conservation security program (csp) customer service results survey
Mr. Chairman, in past testimony before this Subcommittee, I have
discussed the excellent score NRCS received in a measure of customer
satisfaction for conservation assistance. I am proud to report that
according to the American Customer Satisfaction Index (ACSI) conducted
by the University of Michigan, NRCS received an overall score of 76 out
of 100 for administering CSP. This voluntary program supports ongoing
stewardship of private agricultural land by providing payments for
maintaining and enhancing natural resources.
NRCS' score for CSP is considerably higher than the 2005 national
average of 71 for the Federal Government and right on track with
earlier scores for the Environmental Quality Incentives Program (75)
and the Wildlife Habitat Incentives Program (77) from surveys conducted
in 2004.
The four drivers of satisfaction that were measured for CSP include
its Self-Assessment Workbook, the one-on-one personal interview with
NRCS, the contract review and award process, and NRCS staff. This is
the first customer satisfaction survey for this new program.
STREAMLINING FOR CONSERVATION GAINS
NRCS continues to make strides in streamlining operations. In this
process, the Agency is striving to keep the administration of
conservation programs as lean as possible. We are doing that by:
--Streamlining the payment process;
--Building our eGovernment infrastructure, including eForms, and the
programs Web site;
--Reducing required paperwork for customers through a common computer
database in USDA Service Centers;
--Streamlining program forms that are used, trying to be more
consistent between like programs such as the easement programs,
and consolidating program manuals when possible;
--Costing and revising program allocation formulas to distribute
funds to States on resource-based methodology;
--Working on an automated application ranking tool;
--Establishing a process for rapid watershed assessments to provide
initial estimates of where conservation investments can best
address resource concerns;
--Continuing to place programmatic and technical information
available on the Agency's Web site to give our employees and
customers access to the latest, high-quality information; and
--Instituting programmatic reforms such as a pilot sign-up process
for conservation planning technical assistance.
ACCELERATING CONSERVATION IMPLEMENTATION
Accelerating conservation implementation is essential. Wise
management of resources is critical. We need to get the 5 to 10-year
contracts the Agency has signed with farmers completed, get the
conservation on ground, and at the same time, aware of the realities of
farm economics. Conservation is a wise investment in the future of our
country's healthy soil, clean water, and abundant wildlife; but
practicing good conservation also makes good economic sense.
STRATEGIC PLANNING FOR THE FUTURE
I am proud of the accomplishments NRCS achieved in 2005. An effort
that particularly stands out is one undertaken to chart the future by
completing a new strategic plan. The strategic planning process
incorporated internal and external assessments of natural resources,
human capital, civil rights, and other issues. The information
collected through this assessment served as the foundation to formulate
the new strategic plan. This plan will be a comprehensive roadmap to
guide the Agency over the next 10 to 20 years.
The plan introduced a new mission statement, ``helping people help
the land.'' This mission, and an accompanying vision statement,
articulates the Agency's role to assist private landowners and solidify
the essential connection between retaining a viable agricultural
presence on the landscape and sustaining a healthy environment.
CONCLUSION
Mr. Chairman, in summary, we are planning for the future under an
atmosphere of increasingly austere budgets and economic uncertainties
along with a multitude of other unknowns on the domestic and
international fronts. I believe that the Administration's fiscal year
2007 Budget request reflects sound policy, and will provide stability
to the vital mission of voluntary conservation on private lands. The
Budget request reflects sound business management practices and the
best way to work for the future and utilize valuable conservation
dollars efficiently and wisely.
I thank members of the Subcommittee for the opportunity to appear,
and would be happy to respond to any questions that Members might have.
______
Prepared Statement of Bruce I. Knight, Chief, Natural Resources
Conservation Service
Thank you for the opportunity to appear before you today to discuss
our fiscal year 2007 budget request for the Natural Resources
Conservation Service (NRCS).
As we look ahead to fiscal year 2007, and the contents of the
Administration's budget request, I want to take a moment to reflect
upon the successes that NRCS has faced in the past year and what we are
doing to move the Agency forward. It has been a productive year for
NRCS, our partners, and landowners across America. We have assisted
landowners to treat over 42 million acres of conservation and develop
over 4,400 Comprehensive Nutrient Management Plans (CNMP). This brings
the total CNMPs applied with NRCS support since 2002 to more than
14,000. In addition, last year NRCS and our partners:
--Served nearly 3.8 million customers around the country;
--Completed or updated soil survey mapping on 31.2 million acres, of
which, 1.8 million acres were on Native American or Native
Alaskan lands;
--Conducted a comprehensive study of technical assistance,
reaffirming the intrinsic value of scientifically based tools
and activities including developing conservation plans and
encouraging a knowledge-based approach to conservation;
--Committed to over 49,000 Environmental Quality Incentives Program
(EQIP) contracts for multi-year conservation obligations;
--Enrolled over 3,300 Wildlife Habitat Incentives Program (WHIP)
contracts;
--Expanded the Conservation Security Program nationwide to recognize
outstanding land stewards and enable them to do more;
--Helped land managers create, restore, or enhance more than 284,000
acres of wetlands primarily through WRP;
--Facilitated nearly 1 million hours of Earth Team volunteer service;
and
--Registered over 2,500 Technical Service Providers to assist in
conservation planning and implementation efforts, obligating
$52.7 million in fiscal year 2005. This provided the equivalent
of 520 staff years to attain additional conservation
achievements.
As we look ahead to this year and beyond, we will direct our
efforts toward ensuring that all of the potential conservation gains
are fully realized. What I mean by that is NRCS will be focusing on
fine-tuning our business tools and solidifying the progress we have
made in working with farmers and ranchers across America to implement
conservation programs. We want to make sure everything works smoothly--
for our employees and our customers. We want our decisions and
processes to be transparent. We want to be even more efficient,
effective and focused on meeting our customers' needs.
HELPING PEOPLE HELP THE LAND
For over 70 years, NRCS has been committed to locally led,
voluntary cooperative conservation. Last year, one of our district
conservationists from Iowa suggested that we describe our mission as
``helping people help the land.'' The phrase is succinct and it
effectively describes what we do, so our Agency has adopted ``helping
people help the land'' as our new mission statement.
NEW STRATEGIC PLAN
In fiscal year 2005, NRCS initiated an aggressive strategic
planning process to develop a roadmap to guide the Agency over the next
10 to 20 years. This new NRCS Strategic Plan refines and builds on the
goals and successes of past plans; and directly supports the new U.S.
Department of Agriculture (USDA) Strategic Plan. The NRCS plan was
developed around three foundations:
--Agency customers;
--Agency business lines and associated products and services; and
--Priority and newly emerging natural resource conservation issues.
The new plan emphasizes three overarching strategies--cooperative
conservation, the watershed approach, and market-based approaches to
conservation. These complementary strategies will be used effectively
to assist private landowners manage their lands and resources to
achieve national natural resource goals and objectives.
The plan includes six mission goals oriented toward existing and
emerging natural resource challenges. Three are Foundation Goals which
reflect long-standing conservation priorities and include: high
quality, productive soils; clean and abundant water; and healthy plant
and animal communities. Also, new in this plan are three Venture Goals
that reflect emerging areas of natural resource interest, posing
challenges for niche definition and capacity building. The Venture
Goals include: clean air, an adequate energy supply, and working farm
and ranch land preservation.
Even though the agency's new strategic plan has not yet been
implemented, there are things that we are doing already to make this
plan operational. We have integrated the concepts of business lines and
new Agency goals in our fiscal year 2006 business planning process. Our
Strategic Human Capital Plan has adopted the strategic plan as a
framework, ensuring that succession planning aligns with the Agency's
long-term goals and objectives. We are emphasizing cooperative
conservation and market-based and watershed approaches in our programs,
such as in the Cooperative Conservation Partnership Initiative and
Conservation Innovation Grants that offer competitive grants to a broad
and diverse array of potential customers.
HUMAN CAPITAL STRATEGIC PLAN
NRCS is in the process of developing a Human Capital Strategic Plan
to help us focus on the future workforce of our Agency. Over the next 5
years, more than half of Federal employees are eligible to retire. This
pool of potential retirees includes highly skilled key personnel such
as our engineers, hydrologists, soil scientists, and agronomists, just
to name a few. Because of the importance of these disciplines to our
organization, it is vital that we have a strategy in place to fill-in
behind these employees and provide the high level of expertise that our
customers have come to expect. We will develop this plan to address the
potential loss of so many employees and to compete for talent in a
shrinking pool of candidates; primarily due to generational changes in
employment trends, and shifts in academia from agriculture related
disciplines to more ecology and ecological related degrees. We need a
strategy that will continue to make NRCS the ``employer of choice'' for
highly skilled individuals interested in serving in voluntary
conservation.
EMPHASIS ON ENERGY
One of the issues facing many farmers today is the high cost of
fuel, fertilizer and other energy-related inputs. In early December
2005, Secretary Johanns announced the USDA Energy Strategy, which is a
concerted effort to look at both reducing demand for oil and natural
gas and increasing supply through bio-fuels.
To assist in this effort, NRCS has developed the three-click Energy
Estimator Tool, which helps farmers and ranchers determine how much
they could save by switching from conventional tillage to no-till or
another reduced tillage system.
I am pleased to announce that we recently released a Nitrogen
Estimator Tool. Farmers can use this tool to better estimate how much
nitrogen they are applying on the ground in order to better manage and
minimize the amount of fertilizer applied. A large part of fertilizer
costs relate to energy; this tool can help result in a net savings for
farmers and ranchers that apply the technology.
Beyond these two tools, the Agency is also working on an Irrigation
Estimator Tool to help show water savings garnered by switching to less
intensive water conservation practices.
The Agency is working on an enhancement that would help farmers
figure out how much they could save through improved irrigation
systems. A second enhancement will enable producers to predict their
savings by switching from fossil fuel fertilizer to animal manure.
WEB BASED SOIL SURVEY
One of the fundamental building blocks of conservation is
knowledge. We know that farmers, ranchers, contractors, and homeowners
need sound data about the land where they live. In continued efforts to
make conservation data as transparent and available as possible, we
launched a Web Soil Survey to make soils data available upon demand
through the internet. Soil survey maps and related information are
available online for more than 95 percent of the Nation's counties.
As we move forward in fiscal year 2006, there is some innovative
technology that can help farmers and ranchers realize even bigger gains
in their conservation efforts. We look forward to building upon the
technology foundation achieved this year to implement even more
voluntary conservation on America's private lands.
DISCRETIONARY FUNDING
The President's fiscal year 2007 budget request for NRCS reflects
our ever-changing environment by providing resources for the ongoing
mission of NRCS and ensuring that new opportunities are realized.
CONSERVATION OPERATIONS
The President's fiscal year 2007 budget request for Conservation
Operations (CO) proposes a funding level of $745 million, which
includes $634.3 million for Conservation Technical Assistance (CTA),
$89.3 million for Soil Surveys, $10.6 million for Snow Surveys, and
$10.7 million for the 26 Plant Materials Centers. As in past requests,
the Budget does not fund continuation of fiscal year 2006 congressional
earmarks.
Mr. Chairman, while for years we have stated that CO is the heart
of everything our Agency does, we need to do a better job describing
the program's scope and effect. The Office of Management and Budget's
Program Assessment Rating Tool (PART) process has been an important
step in developing meaningful, quantifiable long-term performance
measures. This review has helped the Agency streamline the program and
focus on national priorities in fiscal year 2005 including, development
of CNMPs that will help landowners meet regulatory challenges;
reduction of non-point source pollution (nutrient, sediments,
pesticides, or excess salinity); reduction of emissions, such as
particulate matter, that contribute to air quality impairment;
reduction of soil erosion from agricultural lands; and promotion of at-
risk species habitat conservation.
Mr. Chairman, I am pleased to report that in fiscal year 2005, NRCS
developed and implemented the first comprehensive CTA Program policy
that improves transparency and clarifies the program's mission in an
era of increased accountability. This year, NRCS revised the allocation
process for the CTA Program to ensure that dollars go where the needs
are greatest. This new methodology will provide a more transparent
allocation that addresses resource issues. The new allocation formula
also aligns with the new CTA policy and national priorities, and
integrates program performance measures that were developed in the PART
process.
In addition, this year we had 9 States participate in NRCS' first
conservation planning sign-up. This is a pilot initiative that
emphasizes the importance of conservation planning to help producers be
better prepared to apply for conservation programs and to comply with
Federal, State, tribal and local governmental regulations. The sign-up
enabled landowners to plan more realistically to implement practices
and apply for conservation programs in a more comprehensive approach.
All of these improvements will ensure that the most pressing
conservation needs on America's private lands are addressed and will
help NRCS meet its strategic planning objectives and improve
accountability.
WATERSHED AND FLOOD PREVENTION OPERATIONS
Through the Watershed Protection and Flood Prevention Operations
program that NRCS administers, our employees work in partnership with
local leaders to improve the overall function and health of the
Nation's watersheds. Each project developed under this program has a
specific purpose and benefit; most address a primary purpose of flood
control, while other project benefits include upland conservation
practices that address a variety of natural resources needs such as
water quality improvement, soil erosion control, animal waste
management, irrigation, water management, water supply development, and
recreation enhancement. However, the Administration proposes to
terminate funding for WFPO in fiscal year 2007 for several reasons.
First, the decrease in funding in the WFPO will enable the
Administration to focus limited resources to other higher priority
conservation programs. It is expected that those high-priority
watershed projects not yet completed will continue to receive strong
local support from project sponsors, and that progress on them will
continue to be made.
In 2004, the Administration compared the benefits and costs of
three Federal flood damage reduction programs operated by NRCS, the
Corps of Engineers, and the Federal Emergency Management Agency. The
analysis found that of the three programs, the WFPO program provided
the least net flood damage reduction benefits.
Mr. Chairman, I would also note that the amount of funding
earmarked by Congress for this program nearly equaled the amount
appropriated. This seriously hampers the Department's ability to
effectively manage the program, and does not permit the Agency to
prioritize projects based upon merit and local need.
WATERSHED SURVEYS AND PLANNING
The Watershed Surveys and Planning authorities are directed toward
assessment of natural resource issues and development of watershed
plans to conserve and utilize natural resources, solve local natural
resource and related economic problems, avoid and mitigate hazards
related to flooding, and provide for advanced planning for local
resource development. This includes Floodplain Management Studies,
Cooperative River Basin Studies, Flood Insurance Studies, Watershed
Inventory and Analysis, and other types of studies, as well as Public
Law 566 Watershed Plans.
With the elimination of Watershed and Flood Prevention Operations
(WFPO), continuation of this planning component is no longer necessary.
The fiscal year 2007 budget proposes to redirect this program's
resources to other higher priority programs. It is expected that local
sponsoring organizations, as well as State and local governments, will
assume a more active role in identifying water resource problems and
their solutions.
WATERSHED REHABILITATION
The Watershed Rehabilitation program addresses the problem of aging
dams, especially those with a high risk for loss of life and property.
Fifty-six dams have rehabilitation plans authorized and implementation
of the plans is underway.
NRCS currently has 107 dams that have rehabilitation plans
authorized, and the projects are completed or implementation of the
plans is underway. This number adds to the 728 rehabilitation
assessment reports already completed.
The Administration requests $15.3 million to address critical dams
with the greatest potential for damage to life and property.
RESOURCE CONSERVATION AND DEVELOPMENT PROGRAM
The purpose of the Resource Conservation and Development (RC&D)
Program is to encourage and improve the capabilities of State, local
units of government, and local nonprofit organizations in rural areas
to plan, develop, and carry out programs for resource conservation and
economic development. The program provides technical assistance to
local communities to develop strategic plans that address their locally
identified natural resource and economic development concerns. The
budget proposes to reduce funding by $25 million and consolidate the
number of RC&D coordinators from 375 to about 150. The current number
of authorized RC&D Areas nationwide will be maintained at the current
375. The responsibilities and duties of the RC&D Coordinator position
would be modified to provide more coordination and oversight duties
instead of hands-on, day-to-day activities.
The reduction in funding for the RC&D Program will require that it
be more focused on multi-county/parish planning, intergovernmental
relations, serving as the Federal Government Representative on any
Federal contracts with the RC&D Councils, and coordinating USDA
assistance available toward implementation of RC&D Area Plans. The
overall proposed budget for RC&D in fiscal year 2007 is $25.9 million.
FARM BILL AUTHORIZED PROGRAMS
WETLANDS RESERVE PROGRAM
The Wetlands Reserve Program (WRP) is a voluntary program in which
landowners are paid to retire cropland from agricultural production if
those lands are restored to wetlands and protected, in most cases, with
a long-term or permanent easement. Landowners receive fair market value
for the land and are provided with cost-share assistance to cover the
restoration expenses. The 2002 Farm Bill increased the program
enrollment cap to 2,275,000 acres. WRP also is the principle USDA
program to help meet the President's Wetland Initiative goal to create,
restore and enhance 3 million acres of wetlands by 2009.
The President's 2007 budget proposes $402 million for the WRP, an
increase of $153 million over the 2006 level. This will allow an annual
enrollment of 250,000 acres; an increase of 100,000 acres, and will
bring total cumulative enrollment to 2,225,700 acres.
ENVIRONMENTAL QUALITY INCENTIVES PROGRAM
The purpose of the Environmental Quality Incentives Program (EQIP)
is to provide flexible technical and financial assistance to landowners
that face serious natural resource challenges that impact soil, water,
and related natural resources, including grazing lands, wetlands, and
wildlife habitat management.
In fiscal year 2005, EQIP funding was almost $1 billion. Over
49,000 contracts were written to assist landowners in treating an
estimated 18.1 million acres.
Mr. Chairman, in addition, NRCS assumed all contracting and
administration responsibilities for EQIP (including payments to
participants) were previously made through the Farm Service Agency. All
functions were carried out through a Web-based contracting software
program called ``ProTracts.'' This streamlining of procedures
eliminated duplication of effort and resulted in real-time data.
Technical Service Providers (TSPs) were used to a greater extent
last year and have more than doubled since fiscal year 2003. NRCS
obligated over $52 million in EQIP for TSPs to complement the
conservation planning activities carried out under this program.
NRCS offered approximately $20 million in Conservation Innovation
Grants (CIG) to stimulate the development and adoption of new
innovative conservation approaches while leveraging Federal investment.
This program was authorized under EQIP in the 2002 Farm Bill and allows
competitive grants to be awarded to eligible entities, including State
and local agencies, non-governmental organizations, tribes or
individuals to accelerate technology transfer and to develop promising
new technologies to address some of our Nation's most pressing natural
resource concerns.
The President's budget proposes a level of $1 billion for EQIP,
about the same level as in 2006.
GRASSLAND RESERVE PROGRAM
The 2002 Farm Bill authorized the Grassland Reserve Program (GRP)
to assist landowners in restoring and protecting grassland by enrolling
up to 2 million acres under easement or long-term rental agreements.
The 2002 Farm Bill authorized $254 million for implementation of this
program during fiscal year 2003 through fiscal year 2007. No additional
funding was requested in the President's budget for GRP in fiscal year
2007 as the program reached its statutory funding limit in fiscal year
2005.
CONSERVATION SECURITY PROGRAM
The Conservation Security Program (CSP), as authorized by the 2002
Farm Bill, is a voluntary program that provides financial and technical
assistance for the conservation, protection, and improvement of natural
resources on tribal and private working lands. The program provides
payments for producers who practice good stewardship on their
agricultural lands and incentives for those who want to do more.
In 2005, CSP was implemented in 220 watersheds nationwide,
including Puerto Rico, and resulted in about 12,000 eligible
applications covering more than 9 million acres of privately owned
land. In fiscal year 2004, NRCS initiated the program in 18 watersheds
within 22 States. In the 2-year period since, NRCS has rewarded nearly
14,800 stewards on 10.9 million acres of working agricultural land.
Through the CSP enhancement provisions and the application of
intensive management measures, producers are achieving even greater
environmental performance and additional benefits for society. Several
new conservation activities will allow producers to further enhance
their operation and the natural resources. For example, the energy
component of CSP is rewarding farmers and ranchers for converting to
renewable energy fuels such as soy bio-diesel and ethanol. Because CSP
enhancements go beyond the minimum requirements, innovative producers
are pushing conservation technology to produce even greater
conservation benefits.
Recently, the Secretary announced the fiscal year 2006 sign-up for
CSP which runs through March 31, 2006, in 60 watersheds across all 50
States, the Caribbean, and Guam. The fiscal year 2006 announcement
marks the third CSP sign-up.
The President's fiscal year 2007 budget requests $342.2 million in
program funding an increase of $83 million to continue expanding the
program and rewarding excellent conservation stewards.
WILDLIFE HABITAT INCENTIVES PROGRAM
The Wildlife Habitat Incentives Program (WHIP) is a voluntary
program that provides cost-sharing for landowners to apply an array of
wildlife practices to develop habitats that will support upland
wildlife, wetland wildlife, threatened and endangered species,
fisheries, and other types of wildlife. The budget proposes a funding
level for WHIP of $55 million, with the additional $10 million
supporting the improvement and restoration of streams and rivers for
migratory fish species. NRCS will prioritize WHIP resources to deliver
community-driven, small dam and river barrier removal projects in
coastal States to enhance populations of key migratory fish species.
FARM AND RANCH LANDS PROTECTION PROGRAM
Through the Farm and Ranch Lands Protection Program (FRPP), the
Federal Government establishes partnerships with State, local or tribal
government entities or nonprofit organizations to share the costs of
acquiring conservation easements or other interests to limit conversion
of agricultural lands to non-agricultural uses. FRPP acquires perpetual
conservation easements on a voluntary basis on lands with prime,
unique, or other productive soil that presents the most social,
economic, and environmental benefits. FRPP provides matching funds of
no more than 50 percent of the purchase price for the acquired
easements. The budget proposes a level of $50 million for FRPP in
fiscal year 2007.
EMERGENCY RESPONSE TO HURRICANE KATRINA
In addition Mr. Chairman, the NRCS helped communities across the
Gulf Coast region recover from the devastation caused by the 2005
hurricanes through the Emergency Watershed Protection (EWP) Program.
The purpose of the EWP program is to undertake emergency measures,
including the purchase of floodplain easements, for runoff retardation
and soil erosion prevention to safeguard lives and property from
natural disasters. The typical process for delivery of this program
starts with the local sponsor requesting assistance for a disaster
recovery effort. NRCS then conducts a damage assessment to identify if
the project is eligible and develops an estimated cost. Typical work
under this program consists of debris removal from clogged streams
caused by flooding; installing conservation measures, like reseeding
native grasses to prevent soil erosion on hillsides after a fire; or
replanting and reshaping streambanks due to erosion caused by flooding.
At the request of communities across the Gulf Coast region recovering
from Hurricanes Katrina and Rita, NRCS completed nearly $23 million in
recovery work under the EWP Program immediately following the damage.
In addition, the fiscal year 2006 Supplemental Appropriations provided
$300 million for EWP hurricane recovery efforts.
As part of USDA's hurricane relief efforts, NRCS assisted
hurricane-impacted States by providing maps used by first responders to
assess ground conditions during the search and rescue of survivors.
Current satellite and airborne imagery is used to locate possible
dangers, such as fires, and the safest route to rescue survivors. Soil
survey data layers are used to locate the best areas for animal debris
disposal and burial that will not endanger water sources. NRCS
continues to work with other USDA agencies, the Federal Emergency
Management Agency (FEMA), and State emergency agencies to assist with
post-disaster cleanup and restoration projects in Louisiana, Florida,
Mississippi, Texas, and Alabama.
The President recently made a request for $10 million of additional
funding under WFPO for the EWP Program for the purchase of easements on
floodplain lands in disaster areas affected by Hurricane Katrina and
other hurricanes of the 2005 season. Under the EWP Floodplain Easement
Program, a landowner voluntarily sells a permanent conservation
easement to NRCS and, in return for a payment for the agricultural
value of the parcel, foregoes future cropping and development on the
land. NRCS restores the natural features and characteristics of the
floodplain to generate public benefits, such as increased flood
protection and reduced need for future public disaster assistance.
CONCLUSION
As we look ahead, it is clear that the challenges before us will
require the dedication of all available resources--the skills and
expertise of the NRCS staff, the contributions of volunteers, and
continued collaboration with partners and TSPs.
I am proud of the work and the conservation ethic our people
exhibit day in and day out as they go about the job of getting
conservation on the ground. Through Cooperative Conservation, we have
achieved a great deal of success. We are sharply focusing our efforts
and will work together with our partners to consolidate our gains this
coming year. I look forward to working with you, as we move ahead in
this endeavor.
This concludes my statement. I will be glad to answer any questions
that Members of the Subcommittee might have.
Senator Bennett.
Thank you.
Mr. Bost.
STATEMENT OF ERIC M. BOST
Mr. Bost. Mr. Chairman and Senator Kohl, I thank you for
the opportunity to present the administration's fiscal year
2007 budget for Food, Nutrition, and Consumer Services.
However, before I do that, there are a couple of
accomplishments I would like to note that I think are very
important. We continue to ensure programmatic success to all of
those that are eligible and in need of benefits. Most recently,
26 million people are participating in our Food Stamp Program,
29 million children are participating in our National School
Lunch Program every day, and we are serving approximately 8
million children, women, and infants in our WIC Program.
In addition to that, last year we released ``My Pyramid,''
and we are up to 1.5 billion hits to that site. In addition, we
released ``Pyramid For Children,'' and we are over 500 million
hits.
The Chairman made reference to this, but I also want to
note the outstanding work done by the FNS staff and our
partners; APHSA, America's Second Harvest, and FRAC in terms of
addressing the needs of those persons in our Gulf that were
affected by the hurricanes.
As a result of FNS's efforts, we provided over $900 million
in food stamp benefits to over 1.9 million affected households.
We also provided over 22 million pounds of baby food, formula,
meats, and pasta products to persons in need. We were on the
ground and operating 1 day after the hurricane hit, and it is
something that we are very proud of.
In terms of the fiscal year budget for 2007, we are
requesting funds in the amount of $57 billion. This will allow
us to meet the needs of approximately 25.9 million persons in
our Food Stamp Program, monthly participation in our WIC
Program in the amount of 8.22 million persons, serve 30.9
million children in our National School Lunch Program, and
serve 10.3 million students in our School Breakfast Program.
If our estimates in terms of program participation or costs
are too low, we continue to request $3 billion in contingency
funds for the Food Stamp Program, and for the first time, are
requesting $300 million for our Child Nutrition Programs.
When you put together a budget, you are not able to do all
of the things you might want to do. As a result, we had to make
some tough choices and decisions. That is why we are requesting
the ability to phase out the Commodity Supplemental Food
Program (CSFP) program for a couple of reasons.
First and foremost, CSFP is only operating in limited areas
in 32 States, 2 Indian reservations, and the District of
Columbia. We believe that we can serve these affected persons
in other nutrition assistance programs.
The other thing that I would say that we also believe is
very important is the fact that the error rate in the Food
Stamp Program is at 5.88, which is the lowest that it has ever
been in the history of the Food Stamp Program. It is something
we are also very, very proud of.
With that in mind, we are requesting additional resources
to be able to maintain that level of efficiency in our program.
This budget also requests $675 million to continue in our
efforts to move Americans toward a healthier lifestyle.
Approximately 62 percent of all Americans in this country are
overweight. Thirty percent of us are obese. Twenty-two percent
of all adolescents are overweight. We have seen a doubling in
the rate of Type 2 diabetes among children.
PREPARED STATEMENTS
According to the numbers at the Centers for Disease Control
and Prevention (CDC), we spend approximately $123 billion in
health-related costs because we eat too much and exercise too
little.
I am really pleased to be able to present this budget
request and am more than happy to answer any questions that you
may have.
[The statements follow:]
Prepared Statement of Eric M. Bost
Thank you, Mr. Chairman, and members of the subcommittee for this
opportunity to present the Administration's fiscal year 2007 budget
request for USDA's Food, Nutrition, and Consumer Services (FNCS).
I am here today to discuss with you the President's budget request
which demonstrates the Administration's steadfast commitment to our
Nation's nutrition assistance programs. These programs ensure a
nutrition safety net for the Nation's children, elderly and low-income
households and, in conjunction with the Center for Nutrition Policy and
Promotion, inform all Americans about the importance of good nutrition
and physical activity. I am proud of our accomplishments and honored to
work for a President who provides clear and continued support for these
programs that protect our children and low-income households from
hunger, and help to prevent the health risks associated with poor
nutrition and physical inactivity for all our citizens.
Our Federal nutrition assistance programs are there to meet the
needs of Americans, not just in their everyday life, but also in times
of disaster. I am so proud of my staff's efforts in the aftermath of
the recent hurricanes. When the victims of Hurricanes Katrina, Rita and
Wilma needed our programs, we responded immediately. Cutting through
red tape, simplifying requirements, trucking and airlifting food,
expediting services, working around the clock, our staff worked side by
side with State and local staff and volunteers to help the evacuees get
the food they needed. We even negotiated with other States to borrow
eligibility workers to help meet high program demand within disaster
States. Over $900 million in Food Stamp benefits were provided to over
1.9 million affected households. For situations where food stamps could
not meet the needs, we worked in cooperation with the Agricultural
Marketing Service, made commodity purchases; sped up planned deliveries
already in the pipeline; and diverted product from other parts of the
country to move commodities where they were most needed. In total, we
provided over 22 million pounds of baby food, formula, meats, pasta
products, fruits and vegetables for congregate feeding and also for
distribution to households for home consumption.
I am proud to report to you today that the Federal nutrition
assistance programs staff, at every level, succeeded in providing a
timely and robust nutrition response to these devastating storms. This
response underscores the value and high level of performance of these
programs and the people at the Federal, State and local level who make
them work across the country, every day. These programs truly operated
as a safety net in the days and months immediately following these
disasters. The President's budget is committed to keep these vital
programs strong.
Mr. Chairman, this budget, more than any other I have presented to
you, reflects the fundamental challenge of this Administration:
ensuring that the needs of all eligible persons seeking to participate
in our programs are met while at the same time protecting the interests
of current and future generations who must accept the consequence, both
economic and social, of the unsustainable levels of deficit spending
and Federal debt. Not all of our existing programs are funded in this
request, but we have been very careful to make certain to provide
access to nutrition assistance programs for all eligible populations we
serve.
We have made tough choices and developed a budget request that
makes every dollar produce maximum benefit for the vulnerable
populations served by our programs and for the Nation as a whole. This
is the first budget request I have presented to you that includes an
overall decrease in resources requested. That decrease, however, in no
way represents a wavering in the Administration's demonstrated,
consistent support for the Nation's nutrition safety net. Funds
requested within the budget fully support our best estimates of demand
for program services and cost for the major nutrition assistance
programs in fiscal year 2007.
--This includes a monthly average participation of 25.9 million
persons in the Food Stamp Program. This represents a decrease
of approximately 1 million from fiscal year 2006, the first
projected decrease in participation in 5 years. This reduction
results, in large part, from sustained strong economic
performance and the transition of Gulf Coast disaster
participants to self-sufficiency.
--Participation in the WIC program is expected to rise slightly in
fiscal year 2007 from 8.17 million participants a month to 8.22
million.
--In the School Meals Programs, daily meal service to our youth will
reach 30.9 million students in the National School Lunch
Program and 10.3 million students in the School Breakfast
Program.
Three principle objectives guide our administration of these
programs, (1) to ensure that low-income people have access to food by
ensuring sufficient funding for the major nutrition assistance
programs; (2) to promote healthful diets and active lifestyles by
making nutrition education an integral part of the nutrition assistance
programs; and (3) to manage prudently and efficiently so that every
dollar invested has maximum benefit for those truly in need. The
President's budget request for fiscal year 2007, like all prior
requests submitted by this Administration, reflects these prime
objectives.
ENSURING LOW INCOME PERSONS HAVE ACCESS TO FOOD
At its most basic level, ensuring program access must begin with
making certain that sufficient resources are available so all who are
eligible and in need can have ready access to benefits. The President's
fiscal year 2007 budget requests funds to support anticipated
participation in the Food Stamp Program, the Child Nutrition Programs
and the WIC Program. The Administration's strong commitment to
adequately fund these critical programs acknowledges the inherent
difficulties in anticipating future demand for program services, and
provides for contingency funding should program costs exceed our
estimates. Should our estimates of program participation or costs prove
too low, we have continued to protect program access for all eligible
persons, a key objective of the President and myself, through properly
funded contingency reserves. In the Food Stamp Program we have
continued the funding for the contingency reserve of $3 billion. These
funds are especially important as the program transitions out of a
period of growth and begins to reflect the benefits of strong economic
performance the Nation has been enjoying. In the WIC Program,
approximately $125 million remains available to ensure that the
essential food, nutrition education, and health care referral services
remain available to all who need them.
For the first time, the President has proposed a contingency
reserve for the Child Nutrition Programs. The reserve, proposed at $300
million, will ensure that sufficient resources are available to fully
fund the mandatory entitlement payments to our State and local partners
who make certain that nutritious, appealing meals are available to all
our children in schools and many childcare settings.
PROMOTING HEALTHFUL DIETS AND ACTIVE LIFESTYLES
Our programs provide nutrition assistance, including both access to
healthy food and nutrition education and promotion to support and
encourage a healthy lifestyle. With this nutrition mission in mind, and
the Center for Nutrition Policy and Promotion's (CNPP) focus on the
broader population, we play a critical role in the integrated Federal
response to the growing public health threat posed by overweight and
obesity which affects well over half of adult Americans.
The Federal nutrition assistance programs play a critical role in
combating this epidemic by providing not just access to healthful food,
but also promoting better health through nutrition education and
promotion of physical activity. These FNS program services, along with
the work of the CNPP to improve the diets of all Americans, are a key
component of the President's HealthierUS Initiative. I believe the
American public is served well by USDA's contributions to addressing
the critical nutrition- and health-related issues facing us today. This
budget request provides approximately $675 million in resources tied
specifically to improving the diets, nutrition knowledge and behavior
and promoting the importance of physical activity among the people we
serve.
The CNPP continues to have an integral role in the development and
promotion of updated dietary guidance and nutrition education. The
Dietary Guidelines for Americans (Guidelines), published jointly every
5 years by the USDA and the U.S. Department of Human Services (HHS), is
the cornerstone of Federal nutrition policy, allowing the Federal
Government to speak with one voice. This request features an increase
of $2 million to support the efforts of the CNPP to maintain and
enhance the extremely well-received food guidance system,
MyPyramid.gov, which is one of the most frequently visited of all
Federal websites for the public. In addition, base funding will allow
CNPP to begin preparations for the 2010 update to the Dietary
Guidelines for Americans for which USDA is the lead Federal agency.
MANAGING PRUDENTLY AND EFFICIENTLY
With this budget request, we are asking the Nation to entrust us
with over $57 billion of public resources. We are keenly aware of the
immense responsibility this represents. To maintain the high level of
public trust that we have earned as good stewards of the resources we
manage, we will continue our ongoing commitment to program integrity as
an essential part of our mission to help the vulnerable people these
programs are intended to serve.
This is not a new commitment. As I noted earlier, in fiscal year
2004, the most recent year for which data is available, the Food Stamp
Program achieved a record high payment accuracy rate of 94.1 percent,
up 0.7 percent points from the fiscal year 2003 level of 93.4 percent.
Our budget request included an increase of $4 million in the Nutrition
Program Administration account focused on sustaining the momentum we
have achieved to improve the Food Stamp payment accuracy and overall
program integrity.
We have proposed elimination of restrictive language that prohibits
the use of funds appropriated in the program accounts for the purpose
of studies and evaluations. This proviso has limited our capacity to
support and assess program innovations, many of which are initiated by
our State and local partners. Lifting this restriction will help us to
document results more effectively, and contribute to better program
management.
We also continue to develop strategies to improve the accuracy of
eligibility determinations in our school meals programs--an issue of
mutual concern to all those that care about these programs. The Federal
administrative resources provided for in this budget will allow us to
advance our close work with our State and local program partners on
both of these essential integrity initiatives--continuing both our
successes in the Food Stamp Program and our intensified efforts in
school meals.
In the remainder of my remarks, I'd like to discuss in greater
detail a few of the key proposals contained in the President's fiscal
year 2007 request.
FOOD STAMP PROGRAM
The Food Stamp Program is fully funded in the President's budget at
$37.9 billion. This will support an anticipated average monthly
participation of 25.9 million persons, about 1 million persons lower
than expected in fiscal year 2006. This displays a key strength of the
Food Stamp Program: its ability to respond dynamically to the changing
levels of need within American society. We responded to the hurricanes
in the Gulf Coast this past fall, providing benefits to 1.9 million
affected households. Elsewhere, the program is now responding to the
strength of the economy, and is no longer growing as it did in recent
years.
Should our estimate of fiscal year 2007 program participation or
cost prove to be too low, the program continues to be protected by a
contingency reserve, proposed at $3 billion in new budget authority for
fiscal year 2007. As an alternative to the contingency reserve, the
President's request offers a proposal of indefinite authority. This
form of appropriation would eliminate the need for an annual
contingency reserve appropriation, while at the same time guaranteeing
that sufficient funds will be available to meet the entitlement
components of the program.
We continue to aggressively promote the message that Food Stamps
Make America Stronger, in the sense that the program puts healthy food
on the tables of low-income families and has a positive effect on local
economies. The President's budget features proposals targeted at
ensuring those in need can access benefits without sacrificing their
retirement savings, making certain that all persons in need face the
same program eligibility requirements regardless of where they live,
and improving the ease and accuracy of the certification process so
each household receives the proper benefit level. Given tough budget
constraints, the food stamp proposals focus on those who are most
needy.
The President's budget proposes to expand and make mandatory the
exclusion, first made a State option for 401(k) and Keogh accounts in
the 2002 Farm Bill, of the value of tax-preferred retirement accounts
from the asset test. This exclusion strengthens retirement security
policy and enables low-income people to get nutrition assistance
without depleting their retirement savings. It also simplifies food
stamp resource policy and makes it more equitable because under current
law some retirement accounts are excluded and some are included. This
proposal supports the President's Ownership Society Initiative, by
increasing the ability of low-income people to save for retirement. It
is expected, when fully implemented, to add approximately 100,000
persons to the program and to increase benefits by $592 million over 5
years. The majority of the new participants will be workers and their
families, most with children. On average, each new household will get
$122 in benefits each month.
While we seek to encourage all who are eligible and in need to
participate in the program, we feel strongly we must also ensure that
access to the program is administered in an equitable manner across all
States. For this reason we have once again included a proposal to
eliminate categorical food stamp eligibility for Temporary Assistance
for Needy Families (TANF) participants who receive only services and
not cash benefits. The people affected by this proposal have income or
assets that exceed the program's regular limits. When fully implemented
in fiscal year 2008, this change is estimated to affect approximately
300,000 individuals and save $658 million over 5 years. The President's
proposal restores equity among participants and ensures that food stamp
benefits go to individuals with the most need while retaining
categorical eligibility for the much larger number of recipients who
receive cash assistance through TANF, Supplemental Security Income and
General Assistance.
Also included in the budget request is a proposal to add the Food
Stamp Program to the list of programs for which States may access the
National Directory of New Hires. Access to this national repository of
employment and unemployment insurance data will enhance States' ability
to quickly and accurately make eligibility and benefit level
determinations, improving program integrity. This proposal is expected
to produce a net savings of $1 million annually beginning in fiscal
year 2008.
Finally, the budget request reflects our continued commitment in
two important areas. First the President's request includes a proposal
to exclude special military pay received by members of the armed forces
deployed in combat zones when determining Food Stamp Program
eligibility and benefit amounts for their families back home. This
proposal has been provided for in appropriations law in previous years,
where it is requested again. Second, the Administration remains
committed to working with Congress on a name change for the program.
The President's request continues the process that began in 2006 to
gather information related to a proposed name change for Congressional
consideration.
CHILD NUTRITION PROGRAMS
A base increase of $685 million is requested to fully fund the
Child Nutrition Programs including our three largest programs serving
children, the National School Lunch Program, the School Breakfast
Program, and Child and Adult Care Food Program. This increase will
support the continuing growth in meal service in these programs with
more than 9 billion appealing, nutritious meals provided to all of our
children in schools and many childcare settings. Since fiscal year
2000, average daily participation in the National School Lunch Program
has climbed from 27.2 million to an estimated 30.9 million in fiscal
year 2007. In the School Breakfast Program, 10.3 million children will
be served each day in fiscal year 2007, up from 7.8 million in fiscal
year 2000.
Should this increase not prove sufficient to fully cover program
costs, the budget request proposes an additional increase of $300
million to, for the first time, fund a contingency reserve for the
Child Nutrition Programs. This reserve will serve to ensure access to
these important services to all children and make certain that funds
are available to meet our mandatory obligations to our State and local
partners in the administration of the Child Nutrition Programs.
Improving both the nutrition of children and their awareness of the
role that healthy food choices and physical activity play in promoting
overall well being are core goals of these programs. The Food and
Nutrition Service is reviewing the new Dietary Guidelines, as well as
the Dietary Reference Intakes, and working to incorporate their
recommendations into our nutrient standards and meal patterns.
Additional resources requested under the Nutrition Program
Administration for Cross-Program Nutrition Education will help us to
incorporate family-based approaches to nutrition education into the
Child Nutrition Programs and to leverage those messages and materials
to improve nutrition education and promote smart food choices and
physical activity across all of the nutrition assistance programs. We
also are continuing efforts to promote healthy behaviors through
support for implementation of local school-based wellness programs
required by the Child Nutrition and WIC Reauthorization Act of 2004.
WIC
In fiscal year 2007, the President's budget request of $5.2 billion
anticipates supporting critical services to a monthly average
participation of 8.2 million women, infants and children through the
Special Supplemental Nutrition Program for Women, Infants and Children
(WIC). While this request is a small decrease from the enacted fiscal
year 2006 level, in combination with available prior-year resources it
will support a slight increase from anticipated fiscal year 2006
participation levels. The $125 million contingency reserve appropriated
in fiscal year 2003 and replenished in fiscal year 2005, remains
available to the program should participation or food costs exceed our
projections. We currently do not anticipate the need to access the
contingency reserve in either fiscal year 2006 or fiscal year 2007.
In all of the Federal nutrition assistance programs, the
Administration is committed to ensuring that benefits are targeted to
those most in need. WIC applicants can currently receive adjunctive or
automatic eligibility for benefits based on their participation in
other means-tested programs such as the Food Stamp Program and
Medicaid. However, in some States, individuals with incomes higher than
those established for participation for WIC are eligible for Medicaid.
Included in the budget request is a proposal to limit adjunctive
eligibility based on participation in Medicaid to those individuals
whose incomes are below 250 percent of Federal poverty guidelines.
The budget also reflects the Administration's dual commitment to
both support the WIC Program and to control discretionary spending
growth. We are committed to working with our State partners to manage
program costs to ensure future access to this critical program for all
who are eligible and seek its services. The President's budget contains
a two-part proposal that will allow us to reduce Federal expenditures
on Nutrition Services and Administration (NSA) with the participation
of the States. WIC is currently one of the few Federal programs that do
not require matching funds for administration funds. The President's
budget proposes a 20 percent State matching on NSA funds that would
take effect in fiscal year 2008. The 1-year delay in implementation is
essential so that the States can incorporate this new requirement into
their fiscal plans. As a transitional step, we are renewing our
proposal to cap the level of NSA funding at 25 percent of the total
level grants to States in fiscal year 2007. We will also continue our
long successful partnership with the States in containing food package
cost growth through sharing of best practices and providing technical
assistance in the implementation of food cost containment strategies.
COMMODITY SUPPLEMENTAL FOOD PROGRAM (CSFP)
The President's fiscal year 2007 budget request does not fund CSFP.
We face difficult challenges and decisions with regard to discretionary
budget resources and have chosen to not request funding for this
program for several reasons. First, CSFP is not available in all
States. It currently operates in limited areas of 32 States, two Indian
reservations, and the District of Columbia. Second, its benefits, to a
great extent, overlap those available through other nutrition
assistance programs. Finally, we believe our limited resources are best
focused on those programs that are universally available to serve these
needy populations. The priority of the Administration is to ensure the
continued integrity of the national nutrition assistance safety net,
including the Food Stamp Program and WIC. However, we want to
acknowledge our CSFP partners at the State and local level who have
worked on behalf of this program.
USDA will work closely with CSFP State agencies to ensure that any
negative effects on program participants are minimized, and that they
are transitioned as rapidly as possible to other nutrition assistance
programs for which they are eligible. The budget request includes funds
to support the transition of CSFP participants to nationally available
FNS nutrition assistance programs such as WIC and FSP. The budget
requests $2 million to provide outreach and to assist individuals to
enroll in the Food Stamp Program. Elderly participants who are not
already receiving food stamp benefits will be eligible to receive a
transitional benefit worth $20 per month ending in the first month
following enrollment in the Food Stamp Program under normal program
rules, or 6 months, whichever occurs first. CSFP women, infants, and
children participants who are eligible for WIC benefits will be
referred to that program. Commodities obtained under agriculture
support programs will be redistributed for use in other nutrition
assistance programs, such as TEFAP.
THE EMERGENCY FOOD ASSISTANCE PROGRAM (TEFAP)
TEFAP plays a critical supporting role for the Nation's food banks.
This support takes the form of both commodities for distribution and
administrative funding for States' commodity storage and distribution
costs. Much of this funding flows from the States to faith-based
organizations, a cornerstone of the food bank community. The
President's budget requests the fully authorized level of $140 million
to support the purchase of commodities for TEFAP. Additional food
resources become available through the donation of surplus commodities
from USDA's market support activities. State and local administrative
costs, which support the food bank community, are funded at $49.5
million in the President's request.
NUTRITION PROGRAMS ADMINISTRATION
We are requesting $160.4 million in our Nutrition Programs
Administration account, which reflects an increase of $18.6 million in
our Federal administrative funding. This account supports Federal
management and oversight of a portfolio of program resources totaling
$57 billion, almost 60 percent of the USDA budget.
A key component of this year's request is a $4 million increase to
support additional program integrity and accountability efforts in the
Food Stamp Program. These resources would support up to 40 additional
staff dedicated to continuing our strong record of results in improving
payment accuracy and improving our ability to provide oversight and
technical assistance to our State partners. While I am very proud of
our accomplishments in program integrity, maintaining those gains and
achieving further improvement in payment accuracy is a daunting
challenge. This request represents a small investment that will pay big
dividends in our continuing efforts to make certain we get the right
benefits to the right people.
The budget also requests an increase of $2 million to support the
efforts of the Center for Nutrition Policy and Promotion. These
resources will continue the Center's work on MyPyramid and will support
up to an additional 4 staff years dedicated to this initiative.
Also included in the President's request is $6 million to support
important program assessment and evaluation activities examining
program integrity issues and ways to improve the delivery of benefits
and services with the Food Stamp Program.
Other increases contained in the budget request include the $3
million for Cross-Program Nutrition Education efforts, $3.5 million to
support FNCS' participation in the OMB's government-wide initiative to
modernize and better integrate financial management systems, and $2.8
million to support base pay cost increases.
The increases requested within this budget are essential to
ensuring that FNCS can continue to successfully execute its basic
program administration, oversight and fiscal stewardship duties. We
understand the difficult budgetary circumstances the Federal Government
now faces and support and have participated in the tough choices that
must be made. However, it is essential that FNCS address the serious
challenge posed by both the accumulated effect of over a decade of
staffing reductions and the loss of critical skills and experience
inherent in the impending retirement of close to 30 percent of its
workforce over the next 5 years.
I have begun that process by improving the management of human
capital planning processes, strengthening services provided to
employees, and implementing programs designed to improve the
efficiency, diversity, and competency of the work force. With just
nominal increases for basic program administration in most years, FNCS
has reduced its Federal staffing levels significantly over time. We
have compensated for these changes by working smarter--re-examining our
processes, building strong partnerships with the State and local
entities which administer our programs, and taking advantage of
technological innovations. We are extremely proud of what we have
accomplished and continue to seek new ways to meet the challenges
before us. However our ability to continue to reliably meet these
challenges will be in question if staffing levels continue to decline.
Mr. Chairman, I appreciate the opportunity to present to you this
budget and what it means for the millions of Americans that count on us
for nutrition assistance. I would be happy to answer any questions you
may have.
______
Prepared Statement of Eric J. Hentges, Executive Director, Center for
Nutrition Policy and Promotion
Thank you, Mr. Chairman, and members of the Subcommittee, for
allowing me this opportunity to present testimony in support of the
Administration's budget for fiscal year 2007.
With the Nation facing significant public health issues related to
the quality of the American diet, I believe that the outcome-based
efforts of the Center for Nutrition Policy and Promotion are key to
promoting more healthful eating behaviors and lifestyles across the
Nation. Working from its mission to improve the health of Americans by
developing and promoting dietary guidance that links scientific
research to the nutrition needs of consumers, the Center for Nutrition
Policy and Promotion has a critical role in how USDA meets its
strategic goal to improve the Nation's nutrition and health.
TRENDS CONTINUE TO SHOW NEED FOR REVISED NUTRITION GUIDANCE AND
EDUCATIONAL TOOLS
Recent studies of America's dietary and physical activity behaviors
reveal disturbing trends. First, a combination of poor diet and
sedentary lifestyle not only undermines quality of life and
productivity, but it also contributes to the preventable causes of
deaths each year in the United States.
Second, specific diseases and conditions, such as cardiovascular
disease, hypertension, overweight and obesity, and osteoporosis, are
clearly linked to a poor diet. Recent statistics are staggering: 65
percent of adults (ages 20 to 74) are overweight, with 31 percent among
this group classified as obese. Children and adolescents have not
escaped this unhealthy outcome: among 6- to 19-year-olds, 16 percent
(over 9 million) are overweight--triple what the proportion was in
1980. Another 15 percent are at risk of becoming overweight. With
statistics showing an increase in overweight and obesity and estimates
indicating that obesity-attributable medical expenditures in the United
States reached $75 billion in 2003, the health of Americans is a
serious concern that must be addressed.
Third, the lack of physical activity has been associated with a
number of conditions, including diabetes, overweight and obesity,
cardiovascular disease, and certain cancers. Supporting evidence
indicates less than half (46 percent) of the U.S. population meets the
recommended level of physical activity. USDA's involvement is critical
in helping to stem and eventually reverse some of these disturbing
trends.
DIETARY GUIDELINES FOR AMERICANS ESTABLISH FEDERAL NUTRITION POLICY
In conjunction with the Department of Health and Human Services,
USDA released the sixth edition of the Dietary Guidelines for Americans
on January 12, 2005. This science-based blueprint for promoting good
nutrition and health encourages Americans to ``(1) Make smart choices
from every food group, (2) Find your balance between food and physical
activity, and (3) Get the most nutrition out of your calories.''
The Guidelines, the basis for Federal nutrition policy, provide
advice for healthy Americans, ages 2 years and older, about food
choices that promote health and prevent disease. These Guidelines not
only form Federal nutrition policy, but they also set standards for the
nutrition assistance programs, guide nutrition research and education
efforts, and are the basis for USDA nutrition promotion activities.
As the lead Federal agency in administration of the 2010
Guidelines, USDA's Center for Nutrition Policy and Promotion has
already begun laying the foundations--planning the management
strategies that USDA will use to lead in interagency coordination and
putting into place an evidence-based system. An evidence-based system
will provide a framework or protocol for comprehensive analysis and
synthesis of scientific literature, ranking its strengths according to
established criteria. In developing nutrition guidance, this system
will enable government decision makers to make the best policy
supported by the strongest scientific evidence available, giving both
the Executive and Legislative branches of government along with the
scientific community and the general public a continued confidence in
nutrition policies, guidelines and recommendations that are being
developed and promoted.
MYPYRAMID SERVES AS PREMIER TEACHING TOOL
MyPyramid, based on the 2005 Dietary Guidelines for Americans,
supports two pillars of the President's HealthierUS Initiative: to
``Eat a Nutritious Diet'' and to ``Be Physically Active Every Day.''
MyPyramid is an individualized, interactive tool to help Americans
build the Guidelines into their daily lives. Included in the MyPyramid
webpage are the MyPyramid Plan and MyPyramid Tracker. MyPyramid Plan
helps consumers find the types and amounts of food they should eat to
meet nutrient requirements. MyPyramid Tracker, which has nearly 1
million registered users to date, is for consumers who want a detailed
assessment and analysis of their current eating and physical activity
behaviors; and it provides guidance on how to improve those behaviors.
Since its launch in April 2005, MyPyramid.gov has received over 1.5
billion hits.
USDA also launched MyPyramid for Kids, a child-friendly version of
MyPyramid targeted to schoolchildren. This tool is designed to
encourage children to make smart food choices each day. An interactive
learning computer game; lesson plans for educators; colorful posters
and flyers; and other resources are available to help children make
those choices. To reach an even broader audience, Spanish language
versions of MyPyramid (MiPiramide) and MyPyramid for Kids (MiPiramide
para Ninos) have been developed. These materials have been distributed
to tens of thousands of schools across America and are also available
online.
The President's budget requests an increase of $1.98 million for
CNPP. These funds will support maintenance and enhancements to
MyPyramid, improvements in customer support and outreach capabilities.
This budget will help USDA determine whether the use of the Dietary
Guidelines and MyPyramid by the American public, teachers, students,
and health professionals ultimately improves the American diet.
Planned activities directly related to MyPyramid include the
procurement of ongoing web hosting and maintenance of MyPyramid.gov and
MyPyramid Tracker, which assist the public in monitoring and developing
individualized healthy eating plans. In addition, this funding will
provide for the maintenance and upgrading of related hardware and
software; increased operational costs realized from spikes in the usage
of the website; developmental costs associated with improvements to
MyPyramid Tracker; and acquisition of new food and nutrient composition
data bases and integration of the Healthy Eating Index into MyPyramid
Tracker.
With this budget, CNPP will procure the development and
implementation of a continual evaluation plan for MyPyramid to
ascertain its usefulness by the American consumer. Additionally, CNPP
plans to enhance the MyPyramid.gov website with interactive
capabilities to encourage behavior change that promotes healthful diets
across a broad spectrum of American society. This would include a meal
planning feature which is currently missing, a recipe file feature, and
a shopping list feature all of which have been requested by the public
and the professional nutrition community.
With thousands of emails, written correspondence, telephone
inquiries and hotline calls that have resulted from the overwhelming
success of the Dietary Guidelines for Americans and MyPyramid.gov, CNPP
also intends to use appropriated resources toward four additional staff
years devoted exclusively to assisting the public in the areas of
information dissemination and improvement of the CNPP, Dietary
Guidelines and MyPyramid websites. These additional staff years would
allow CNPP to provide customer support in timely manner; enhance the
outreach and promotion of MyPyramid.gov; and support USDA's
Nutrition.gov website and USDA's on-line ``Ask the Expert.''
With your support, we look forward to continuing to build, enhance,
and better promote personalized and individualized nutrition guidance
tools--such as MyPyramid.gov--reaching millions of Americans daily.
Your support will also help us improve customer support and outreach as
well as set the foundation for future development of scientific
nutrition policy, which is vital to addressing the growing problems of
overweight and obesity and the related health challenges in America.
I thank the Committee for the opportunity to present this written
testimony.
______
Prepared Statement of Roberto Salazar, Administrator, Food and
Nutrition Service
Thank you, Mr. Chairman, and members of the Subcommittee for
allowing me this opportunity to present testimony in support of the
fiscal year 2007 budget request for the Food and Nutrition Service
(FNS).
FNS is the agency charged with administering the fifteen Federal
nutrition assistance programs which create the Nation's nutrition
safety net and providing Federal leadership in America's ongoing
struggle against hunger and poor nutrition. Our stated mission is to
increase food security, reduce hunger and improve health outcomes in
partnership with cooperating organizations by providing children and
low-income people access to nutritious food and nutrition education in
a manner that inspires public confidence and supports American
agriculture. The budget request clearly demonstrates the President's
continuing commitment to this mission and our programs as well as
strengthens the Federal nutrition assistance safety net in a time of
competing priorities and limited resources. Balancing program access,
good nutrition, and program integrity, this budget makes tough choices
to meet our key commitments:
--To ensure that low-income people have access to food by ensuring
sufficient funding for the major nutrition assistance programs.
--To promote healthful diets and active lifestyles by making
nutrition education an integral part of nutrition assistance
programs.
--To manage prudently and efficiently so that every dollar invested
has the maximum positive benefit for those truly in need.
A request of $57 billion in new budget authority is contained
within the fiscal year 2007 budget to fulfill this mission through the
FNS nutrition assistance programs. These critical programs touch the
lives of more than 1 in 5 Americans over the course of a year. Programs
funded within this budget request include the National School Lunch
Program (NSLP), which will provide nutritious school lunches to 30.9
million children each school day, the WIC Program, which will assist
with the nutrition and health care needs of 8.2 million at risk
pregnant and postpartum women, infants and children each month, and the
Food Stamp Program (FSP), which will ensure access to a nutritious diet
each month for an estimated 25.9 million people. The remaining programs
include the School Breakfast Program (SBP), the Summer Food Service
Program (SFSP), the Child and Adult Care Food Program (CACFP), The
Emergency Food Assistance Program (TEFAP), the Food Distribution
Program on Indian Reservations (FDPIR) and the Farmers' Market
Programs.
We are proposing, with this budget request, the elimination of the
Commodity Supplemental Food Program (CSFP). The priority of the
Administration, as reflected in the President's budget request, is to
ensure the continued integrity of the national nutrition assistance
safety net. CSFP is only available in limited areas. It operates in
parts of 32 States, two Indian Tribal Organizations, and the District
of Columbia. Its benefits and target populations to a great extent,
overlap with two of the largest nationwide Federal nutrition assistance
programs--Food Stamps and WIC. FNS seeks to serve the children and low-
income households of this Nation. We believe the President's budget
request, allows us to focus scarce resources on addressing the diverse
ways which hunger and nutrition-related problems present themselves
through the core programs of the nutrition safety net.
The resources we are here to discuss represent an investment in the
health, self-sufficiency, and productivity of Americans who, at times,
find themselves in need of nutrition assistance. Under Secretary Bost,
in his testimony, has outlined the three critical challenges which the
Food, Nutrition and Consumer Services team has focused on under his
leadership: promoting access and awareness of the Federal nutrition
assistance programs; addressing the growing epidemic of obesity; and,
improving the integrity with which our programs are administered. In
addition to these fundamental priorities specific to our mission, the
President's Management Agenda provides an ambitious agenda for
management improvement across the Federal Government as a whole. I
would like to report on our efforts to address three specific items
under this agenda: reducing improper payments and enhancing the
efficiency of program delivery, building partnerships with faith and
community-based organizations, and systematically planning for the
human capital challenges facing all of the Federal service.
THE CHALLENGE OF IMPROPER PAYMENTS
Good financial management is at the center of the President's
Management Agenda. As with any Federal program, the nutrition
assistance programs require sustained attention to program integrity.
We cannot sustain these programs over the long term without continued
public trust in our ability to manage them effectively. Program
integrity is as fundamental to our mission as program access or healthy
eating. Our efforts to minimize improper program payments focus on (1)
working closely with States to improve food stamp payment accuracy; (2)
implementing policy changes and new oversight efforts to improve school
meals certification; and (3) improving management of CACFP providers
and vendors in WIC. We have identified these 4 programs as ones
susceptible to improper payments and will continue to enhance the
efficiency and accuracy with which these programs are delivered.
I am happy to report that in fiscal year 2004, the most recent year
for which data is available, we have achieved a record level of food
stamp payment accuracy with a combined payment accuracy rate of 94.12
percent. This is the sixth consecutive year of improvement, making it
the lowest rate in the history of the program. With this budget
request, we will continue our efforts with our State partners toward
continued improvement in the payment accuracy rate. We will continue
efforts to address the issue of proper certification in the school
meals programs in a way that improves the accuracy of this process
without limiting access of eligible children. Analytical work has begun
to better assess the accuracy of eligibility determinations in the
CACFP.
FAITH-BASED AND COMMUNITY ORGANIZATIONS OUTREACH
Faith-based and community organizations have long played an
important role in raising community awareness about program services,
assisting individuals who apply for benefits, and delivering benefits.
President Bush has made working with these organizations an
Administration priority, and we intend to continue our outreach efforts
in fiscal year 2007. The partnership of faith-based and community
organizations and FNS programs, including TEFAP, WIC, CACFP and NSLP is
long-established. Significant numbers of faith-based schools
participate in the NSLP and many child care providers and sponsors are
faith-based and community organizations. In addition, the majority of
food pantries and soup kitchens that actually deliver TEFAP benefits
are faith-based and community organizations. Across the country, faith-
based organizations have found over the years that they can participate
in these programs without compromising their mission or values. They
are valued partners in an effort to combat hunger in America. I am
happy to report we have provided eight grant awards of approximately $2
million to community and faith-based organizations to test innovative
food stamp outreach strategies to reach underserved, eligible
individuals and families.
HUMAN CAPITAL MANAGEMENT
We currently estimate that up to 80 percent of our senior leaders
are eligible to retire within five years, as is nearly 30 percent of
our total workforce. FNS must address this serious challenge by
improving the management of the agency's human capital, strengthening
services provided to employees, and implementing programs designed to
improve the efficiency, diversity, and competency of the work force.
With just nominal increases for basic program administration in most
years, the FNS has reduced its Federal staffing levels significantly
over time.
We have now reached a critical point within our agency staffing
levels; we simply must have the ability to develop the resources
necessary to continue to assure appropriate access to the agency
programs while maintaining stellar integrity outcomes. While we have
compensated in the past by building strong partnerships with the State
and local entities which administer our programs and taking advantage
of technological innovations, the President's budget proposes the
addition of 40 staff years to perform fundamental program integrity
activities for the Food Stamp Program.
It is also important that we have the ability to conduct research
on our programs and we ask that we not be prohibited from doing so. We
are extremely proud of what we have accomplished. In order to continue
to achieve improvements in program integrity and program access; I
believe full funding of the Nutrition Program Administration (NPA)
request in this budget is vital.
Now, I would like to review some of the components of our request
under each program area.
FOOD STAMP PROGRAM
The President's budget requests $37.9 billion for the Food Stamp
account including the Food Stamp Program and its associated nutrition
assistance programs. These resources will serve an estimated 25.9
million people each month participating in the Food Stamp Program
alone. Included in this request is the continuation of the $3 billion
contingency reserve provided for the program in fiscal year 2006. While
we anticipate improvement in the general economy, the turning point of
participation continues to be challenging to predict.
To better meet this challenge, we have proposed, as an alternative
to the traditional contingency reserve, indefinite funding authority
for program benefits and payments to States and other non-Federal
entities. These contingency resources are important to not only
ensuring the availability of basic program benefits, but also to
ensuring that adequate funds are available in the event of disasters.
The Food Stamp Program is designed to respond, not only to the economy
but also to disaster-related food assistance needs. Our recent
experience with the Gulf Coast disasters made this very clear when over
$900 million in food stamp benefits have been issued to date to over
1.9 million households affected by Hurricanes Katrina, Rita and Wilma
in the fall of 2005. In addition, we have made a concerted effort to
encourage working families, senior citizens and legal immigrants to
apply for benefits.
The President's budget request contains three legislative proposals
for the Food Stamp Program. These proposals work together to strengthen
the national framework of the Food Stamp Program by setting national
standards that better target benefits to low-income persons. They
support the priorities of access and nutrition assistance for those in
need while ensuring integrity in the program.
The budget proposes to exclude the value of tax-preferred
retirement accounts from the Food Stamp certification asset test. This
exclusion strengthens retirement security policy and enables low-income
people to get nutrition assistance without depleting their retirement
savings. It also simplifies food stamp resource policy and makes it
more equitable because under current law, some retirement accounts are
excluded while others are not. This proposal is consistent with the
President's Ownership Society Initiative, by increasing the ability of
low-income people to save for retirement.
Our budget once again proposes to eliminate categorical Food Stamp
eligibility for Temporary Assistance for Needy Families (TANF)
participants who receive only non-cash TANF services. Fully implemented
in fiscal year 2008, this change is estimated to affect approximately
300,000 individuals and save $658 million over five years. We believe
this proposal ensures that food stamp benefits will go to the
individuals with the most need and retains categorical eligibility for
the large number of recipients who receive cash assistance through
TANF, Supplemental Security Income and General Assistance.
Also included in the budget is a proposal to add the Food Stamp
Program to the list of programs for which States may access the
National Directory of New Hires. Access to this national repository of
employment and unemployment insurance data will enhance States' ability
to quickly and accurately make eligibility and benefit level
determinations, supporting continued program integrity. The budget also
requests a continuation of a policy included in last year's
appropriations act to exclude special military pay received by members
of the armed forces serving in combat zones when determining food stamp
benefits for their families back home.
Finally, the Administration remains committed to proposing a name
change for the program to Congress. We will continue the process that
began in 2006 to gather information related to a proposed name change
for Congressional consideration.
CHILD NUTRITION PROGRAMS
The budget requests $13.6 billion for the Child Nutrition Programs,
which provide millions of nutritious meals to children in schools and
in childcare settings every day. This level of funding will support an
increase in daily NSLP participation from the current 30.2 million
children to approximately 30.9 million children. Requested increases in
these programs reflect rising school enrollment, increases in payment
rates to cover inflation, and proportionately higher levels of meal
service among children in the free and reduced price categories. To
ensure that Child Nutrition Programs respond to unforeseen increases in
participation, the request provides $300 million in contingency
funding. This contingency reserve would make supplemental funding
requests unnecessary at times of budgetary shortfalls. Similar to the
Food Stamp Program, such a shortfall could result from larger than
anticipated program participation growth, responses to natural
disasters or other national emergencies.
We are continuing to implement program changes and new activities
resulting from the 2004 reauthorization of these programs including the
Fruit and Vegetable Program. We are also continuing our efforts to
promote healthy behaviors by supporting the implementation of local
wellness policies. We created the HealthierUS Schools Challenge to
encourage communities to improve the foods offered at school and other
aspects of a healthy school nutrition environment and to recognize
schools that made improvements.
FNS is continuing to integrate the 2005 Dietary Guidelines for
Americans recommendations into the school meal programs. By law, school
meals are required to be consistent with the Guidelines. Meals in the
NSLP must provide one third of the Recommended Dietary Allowances
(RDAs), while meals in the School Breakfast Program must provide one
fourth of the RDAs. An FNS workgroup is reviewing the new Guidelines as
well as the Dietary Reference Intakes (DRIs) nutrient standards to
identify potential changes in the meal patterns within the existing
meal reimbursement structure.
The workgroup will make recommendations based on its review. USDA
will publish a proposed rule with changes to the meal patterns and
actively seek public comment. Federal, State and local staff will work
together to implement the new requirements, plan improved recipes and
menus, modify contracts to obtain the needed ingredients or modified
products, and train staff who prepare and serve the food.
SPECIAL SUPPLEMENTAL NUTRITION PROGRAM FOR WOMEN, INFANTS AND CHILDREN
(WIC)
The President's budget request includes $5.2 billion for the WIC
Program. This request will provide food, nutrition education, and a
link to health care to a monthly average of 8.2 million needy women,
infants and children during fiscal year 2007, including former CSFP
participants.
The budget contains a two-part proposal that reflects our
commitment to both support core activities of the WIC Program and
reduce Federal discretionary spending. We are proposing to cap the
level of Nutrition Services and Administration (NSA) funding to no more
than 25 percent of the total WIC State grant amount for fiscal year
2007. We continue to believe the reduction in NSA funding will not have
a significant impact on the delivery of core WIC services. States will
be encouraged to work with Federal program staff to seek efficiencies
in the delivery of the program to ensure that the reduction in NSA
funding does not impact core services.
Looking forward to fiscal year 2008, the budget proposes to replace
this NSA cap with a 20 percent State match requirement. WIC is
currently one of the few Federal programs that do not require State
matching funds for administrative purposes. The proposal is not
effective until fiscal year 2008 so that States are provided adequate
notification to allow their legislatures to appropriate funds.
The President's budget request contains a proposal which limits
automatic (adjunctive) eligibility based on participation in Medicaid
to those individuals whose incomes are below 250 percent of Federal
poverty guidelines. In the WIC Program, applicants can currently
receive automatic (adjunctive) eligibility for benefits based on their
participation in other means-tested programs such as the FSP and
Medicaid. However, in some States, Medicaid permits participation of
individuals with incomes higher than those established for eligibility
for WIC (185 percent of the Federal poverty level). This proposal will
better target WIC benefits to those most in need and, if enacted, the
proposal will affect six States (Missouri, Maryland, Minnesota,
Vermont, New Hampshire and Rhode Island).
The $125 million contingency fund provided in the fiscal year 2003
appropriation and replenished in fiscal year 2005, continues to be
available to the program. We currently do not anticipate using the
reserve in either fiscal year 2006 or 2007, as available resources in
fiscal year 2006 and the President's budget request will fully meet our
projected program need for those 2 years.
FNS is continuing its efforts to review and consider revisions to
the WIC food package. In September 2003, FNS contracted with the
National Academies of Sciences' Institute of Medicine (IOM) to
independently review the WIC food packages. The IOM recommendations on
the WIC Food Packages were published in a final report in April, 2005.
FNS has used these recommendations along with comments received on the
public notice soliciting comments on food package changes to develop a
proposed rule to update the WIC food packages. This proposed rule is in
clearance and is expected to be published in the Summer of 2006.
The President's budget also requests the continuation of the
moratorium on the authorization of new WIC-only stores. The current
moratorium was put in place through the fiscal year 2006 appropriations
bill and will expire at the end of this year. We believe it is
important to continue this moratorium due to the uncertainty that
States encountered concerning the status of our regulations
implementing new management controls on WIC vendor authorizations. This
uncertainty arose as a consequence of a law suit filed by the National
Women, Infants, and Children Grocers Association and the subsequent
Temporary Restraining Order (TRO) issued by the Federal District Court.
Although the law suit was resolved in favor of the government, States,
particularly those covered by the TRO, were delayed several months in
moving ahead with the implementation of new requirements. Therefore, to
give States reasonable opportunity to put into place approved plans
effecting these new cost control requirements, we believe continuation
of the moratorium is prudent.
COMMODITY SUPPLEMENTAL FOOD PROGRAM (CSFP)
CSFP serves elderly persons and at risk low-income pregnant and
post-partum and breastfeeding women, infants and children up to age
six. The budget does not request funding for this program which is not
available nationwide and duplicates two of the Nations' largest Federal
nutrition assistance programs--Food Stamps and WIC. This program
operates in selected areas in just 32 States, the District of Columbia,
and two Indian Tribal Organizations. The populations served by CSFP are
eligible to receive similar benefits through other Federal nutrition
assistance programs that offer them flexibility to meet their
individual needs. The Administration has proposed this change to better
target limited resources to those major programs that are available
nationwide, promoting equity and effectiveness.
The President's budget does include a request for funds to support
the transition of CSFP participants to nationally available FNS
nutrition assistance programs such as WIC and FSP. USDA will work
closely with CSFP State agencies to ensure that any negative effects on
program participants are minimized. We plan to implement a transition
strategy to encourage those women, infants and children that are
eligible for WIC to apply for that program, and to encourage elderly
CSFP recipients to apply for the Food Stamp Program.
The budget request includes $2 million to provide outreach and to
assist individuals enrolling in the FSP. Elderly participants who are
leaving the CSFP upon the termination of its funding and who are not
already receiving FSP benefits will be eligible to receive a
transitional benefit of $20 per month. This transition benefit will end
in the first month following enrollment in the FSP under normal program
rules, or in 6 months, whichever occurs first. CSFP women, infants, and
children participants who are eligible for WIC benefits will be
referred to that program. Commodities obtained under agriculture
support programs that would be used to support CSFP will be donated for
use in other nutrition assistance programs, such as TEFAP.
THE EMERGENCY FOOD ASSISTANCE PROGRAM (TEFAP)
As provided for in the Farm Bill, the budget requests $140 million
for commodities in this important program. Our request for States'
storage and distribution costs, critical support for the Nation's food
banks, is $50 million. The Food and Nutrition Service is committed to
ensuring the continuing flow of resources to the food bank community
including directly purchased commodities, administrative funding, and
surplus commodities from USDA market support activities. Much of this
funding is provided, at the local level, to faith-based organizations.
Surplus commodity donations significantly increase the amount of
commodities available to the food bank community from Federal sources.
SENIORS' FARMERS MARKET NUTRITION PROGRAM (SFMNP)
The President's budget request includes two provisions that improve
the value of the SFMNP benefits. The first provision prohibits farmers
selling eligible foods under the SFMNP from charging sales tax on fresh
fruits and vegetables that are purchased using SFMNP checks or coupons,
or that are provided to eligible recipients through community supported
agriculture. The second provision ensures that the value of benefits
provided to eligible recipients is not considered as income in the
process of determining eligibility for any other Federal or State
programs, such as food stamps, TANF, energy assistance, and housing
assistance. It would also ensure that the value of the SFMNP benefit
would not be considered as income in calculating the recipients'
Federal or State tax obligations. These proposals are consistent with
the way benefits are treated in all other Federal nutrition assistance
programs.
NUTRITION PROGRAMS ADMINISTRATION (NPA)
We are requesting $160.4 million in this account, an increase of
$18.6 million over our fiscal year 2006 level. This increase will
partially offset personnel-related costs of the FNS workforce in fiscal
year 2007. Our request for Federal administrative resources is needed
to sustain the program management and support activities of our
employees nationwide. The NPA account supports both FNS' administration
of the nutrition assistance programs and CNPP's nutrition policy
development and promotion activities targeted at the general
population. Specific requests for this account include $2 million to
support continuing work on MyPyramid; $4 million to support initiatives
to improve program integrity within the Food Stamp Program and $3
million to improve the coordination of nutrition education efforts
across all of the our programs.
Our request for $6 million to fund critical research and evaluation
activities examining program integrity issues and ways to improve the
delivery of program services is essential to the management of our
programs, as is the $3.5 million request to fund FNS' participation in
Office of Management and Budget's initiative to modernize and better
integrate financial management system across the government. I firmly
believe we need this increase in NPA funding in order to maintain
accountability for our $57 billion portfolio and to assist States to
effectively manage the programs and provide access to all eligible
people.
Thank you for the opportunity to present this written testimony.
Senator Bennett. Thank you very much.
In spite of how much we eat, we still have surpluses that
Dr. Collins talks about. That is why we need to export.
Yes, sir. Dr. Raymond.
STATEMENT OF RICHARD RAYMOND
Dr. Raymond. Thank you, Mr. Chairman and Senator Kohl.
I am pleased to appear before you today to discuss the
status of the Food Safety and Inspection Service (FSIS)
programs and the fiscal year 2007 budget request for food
safety within the U.S. Department of Agriculture.
As we begin another new year at USDA, I would like to point
out that this one marks the 100th anniversary of the passage of
the Federal Meat Inspection Act. We can look back over the past
century with pride and certainly gain a greater appreciation
for what USDA has done to protect our food supply and further
public health protection.
Today, I will share with you some recent accomplishments,
as well as our priorities to further protect the food supply,
and will conclude with some highlights of our fiscal year 2007
budget request.
FSIS is accountable for ensuring safe meat, poultry, and
egg products for 295 million people in this country and
millions more around the world. In addition, we are accountable
for ensuring compliance with the Humane Methods of Slaughter
Act, so that all livestock used for human food are humanely
handled and slaughtered.
There are indications that our risk-based Hazard Analysis
and Critical Control Point, known as HACCP, system is working.
We have seen dramatic declines in the prevalence of pathogens
in the products that we regulate and the numbers of food-borne
illnesses stemming from these pathogens.
Our regulatory sampling for E. coli O157:H7 and Listeria
monocytogenes shows evidence of our successes. We have gone
from a 0.86 prevalence rate for positive E. coli O157:H7
samples in calendar year 2000 to only 0.17 percent prevalence
rate for positives in the calendar year 2004. That is a four-
fold drop.
During the same period, the prevalence rate for Listeria
monocytogenes samples testing positive dropped from 1.45
percent in calendar year 2000 to only 0.55 percent in calendar
year 2004, a three-fold drop.
Another success has been the break in the annual cycle of
multi-million pound recalls and a dramatic decline in the
number of recalls each year. We reached an all-time high of 113
recalls, totaling nearly 61 million pounds of product in 2002,
and in 2004, we were down to only 48 recalls, totaling
approximately 3 million pounds of product.
We have also seen the effect that the declining number of
positive E. coli: O157:H7 and Listeria monocytogenes samples is
having on food-borne illnesses caused by these two pathogens
over an 8-year period of time. Illnesses caused by E. coli
O157:H7 have decreased by 42 percent. That is less than 1
person per 100,000 population. And those illnesses caused by
listeria have dropped by 40 percent.
I might add, these numbers do come from the CDC. These are
not our numbers. I do feel that a picture is worth more than
1,000 words, and I have included graphs with our submitted
written testimony with those numbers.
These successes would indicate that our risk-based approach
is working and that we are protecting public health through a
safer food supply. If we make the assumption, from the E. coli
and Listeria data, that using product sampling trends can also
be indicators for human illness trends, then we do have a
glaring problem. That would be Salmonella.
According to our sampling data, the number of product
samples positive for Salmonella has been on the rise in several
poultry categories over the past 3 years, specifically in young
chicken or broiler carcasses. The overall incidence of
Salmonella infections also remains far greater than for other
food-borne pathogens.
In 2004, according to data, again from the CDC, there were
14.7 cases of culture-proven Salmonella infections per 100,000
population in this country. This means 115 people are infected
by Salmonella every day, or 42,000 every year. The CDC also
says this is an underestimate by a factor of 38, which means
that nearly 1.3 million people actually had Salmonella
infections last year. In my view, that is way too high.
Salmonella infection rates are not declining like they are
for the E. coli, Listeria, and Campylobacter bugs. In fact,
they are rising for certain Salmonella serotypes. Last month,
we announced an initiative to reduce Salmonella in meat and
poultry products. This initiative will help FSIS be more
proactive and will prevent illnesses.
It incorporates 11 steps, including increased product
sampling and food safety assessments in plants where they are
most needed, and our quarterly publication of nation-wide
Salmonella data by class.
A $602,000 increase that we are requesting for our risk-
based Salmonella approach in fiscal year 2007 would, among
other things, allow us to do serotyping more quickly and to
initiate more food safety assessments at high-risk
establishments before an outbreak occurs.
Our next priority for the year is the cornerstone strategy
to further improve food safety, implementing a more robust
risk-based inspection system. Our 100-year-old inspection
system was based on visual examination for visible signs of
disease. The future demands that we also be able to identify
things that the human eye cannot see, things the nose cannot
smell, and things the fingers cannot feel.
We need to be able to better anticipate and more quickly
respond to food safety challenges before they negatively affect
the public's health. The $2.6 million increase that we are
seeking in the 2007 budget for risk-based inspection services
will help FSIS reallocate its resources to focus more closely
on food safety systems and prevent public health problems
before they occur.
Finally, to further improve our food defense capabilities,
we are asking for an increase of $15.8 million for food and
agriculture defense. A major component of this request will be
allocated for the enhancement of the Food Emergency Response
Network, known as FERN, which is a joint laboratory partners
project between FSIS, Department of Health and Human Services,
FDA, and selected State public health laboratories.
We saw what happened to laboratory capacity and the U.S.
Postal Service efficiency when just a few letters were sent
containing anthrax to just a few persons. That same thing can
happen again with one phone call to the Washington Post
indicating that the meat supply has been contaminated
intentionally.
That is why our $13 million request for FERN will provide
23 selected existing State or local laboratories with the
necessary training, equipment, and supplies that they need so
that surge capacity can be handled more quickly and closer to
home.
From a public health standpoint, an investment in FERN is
absolutely essential if we want to prevent or mitigate the loss
of life and economic hardship if an intentional or an
unintentional incident affecting the food supply or even a hoax
were to happen.
We must also be prepared for the distinct possibility that
one or all of our three FSIS laboratories could be
intentionally incapacitated in an attack on our food supply.
Overall, in fiscal year 2007, FSIS is requesting an
appropriation under current law of $862.9 million, a net
increase of about $33.5 million from the enacted level for
fiscal year 2006. This request supports the agency's basic
mission, providing continuous or daily inspection in each U.S.
meat, poultry, and egg products plant. The agency's permanent
statutory obligation to provide continuous inspection is a
labor-intensive mandate, therefore making its salary costs
relatively inflexible.
An increase of $16 million for the FSIS inspection program
is requested to provide for a 2.2 percent pay raise for FSIS
employees as well as $1 million for salary increases in
cooperating State inspection programs in fiscal year 2007 to
assure that the agency is provided sufficient funds to maintain
its programs.
PREPARED STATEMENT
Mr. Chairman, thank you again for providing me the
opportunity to speak with the subcommittee and submit testimony
regarding the steps that we are taking to continue our public
health leadership role. Implementation of these budget
initiatives is imperative so that we can continue to ensure the
safety of the products that we regulate.
I look forward to working with you and the subcommittee to
further improve our food safety program, and I would welcome
any questions from the committee that you might have.
[The statement follows:]
Prepared Statement of Richard Raymond
Mr. Chairman and Members of the Subcommittee, I am pleased to
appear before you today to discuss the status of the Food Safety and
Inspection Service's (FSIS) programs and the fiscal year 2007 budget
request for food safety within the U.S. Department of Agriculture
(USDA). I am Dr. Richard Raymond, Under Secretary for Food Safety. With
me today is Dr. Barbara Masters, Administrator of FSIS.
USDA Secretary Mike Johanns and I share a passion for public
health. I accepted this position last year because of the Secretary's
commitment. I knew he would support and allow us to move forward to
further enhance public health protection. The long history this Agency
has of protecting public health was another aspect that drew me to this
opportunity.
In fact, this year marks the 100th anniversary of the passage of
the Federal Meat Inspection Act (FMIA), which ushered in a new era of
food safety on a national level. Even prior to the passage of the FMIA,
FSIS' predecessor agency, the Bureau of Animal Industry (BAI), carried
out many important responsibilities to protect public health here and
abroad. With an appropriation of $150,000 in 1884--the first year of
its existence--the BAI focused on preventing diseased animals from
being used as food. Then in 1891, the initial Meat Inspection Act of
1890 was amended to cover the inspection and certification of all live
cattle and beef for export.
As you see, the USDA has a long and proud history in protecting
public health through food safety. To give you an idea of how far we
have come in protecting public health, let me share these two facts
with you.
One hundred years ago in the United States, the life expectancy was
45 years. Now it is approximately 75 years. And 100 years ago in the
United States, one in five coffins contained a child under 5 years old.
Today that number in the United States is only one in 100 coffins.
These are amazing accomplishments that have had a profound effect
on our society and everyone here. Clean water, proper sewage treatment,
vaccines and antibiotics have all played an important role, but a safer
food supply has also played a vital role in this amazing improvement.
This is truly a good story, but the journey is far from over. There
is much more we need to do. Both Secretary Johanns and I want to push
the envelope to improve food safety and public health. We all must
strive to do better because of constantly evolving threats and
challenges to food safety and our public health system. Having been in
the medical profession for 27 years as a doctor in both rural and urban
parts of Nebraska, and having spent the last 6 years prior to USDA in
public health, I know that the public health environment constantly
evolves and it is not always a nine-to-five job. Product recalls during
off hours and the Agency's response in the aftermath of Hurricane
Katrina are just a couple of examples of the many instances when FSIS
personnel worked many hours beyond their regular tours of duty.
This is why I am truly proud and impressed by the dedicated
professionals at FSIS, who often put in long hours when needed to
ensure that our meat, poultry and egg products supply is the safest in
the world. Their support and the Agency's successes in protecting the
health and well being of millions of consumers worldwide would not have
been possible without the resources you have so generously given to us.
I will cover FSIS' successes in more detail, our priorities in the
coming year, and conclude with a discussion of the fiscal year 2007
budget request.
Accomplishments
We are accountable for protecting the lives and well-being of 295
million people in this country and millions more around the world.
There are indications that our risk-based system to protect these
consumers is working. We have seen dramatic declines in the prevalence
of pathogens in the products we regulate and the numbers of foodborne
illnesses stemming from these pathogens due to many actions by the
Agency including the use of risk assessments, working with our partners
along the farm-to-table continuum, and basing our policies on sound
science.
Regulatory Sampling
One such success is apparent in our regulatory sampling for E. coli
O157:H7 and Listeria monocytogenes.
Let's take a look at results from our microbiological surveillance
testing program for E. coli O157:H7. We have gone from 59 positives in
7,010 samples for E. coli O157:H7 in CY 2001 to only 14 positives in
8,010 samples in CY 2004. Each year's prevalence rate is listed below.
--In CY 2001, our testing program yielded 59 positive results out of
7,010 samples for a rate of .84 percent;
--In CY 2002, there were 55 positive results from 7,025 samples for a
rate of .78 percent;
--In CY 2003, there were 20 positives out of 6,584 samples for a rate
of .3 percent; and
--In CY 2004, there were 14 positives out of 8,010 samples for a rate
of .17 percent.
Our testing for Listeria monocytogenes (Lm) in all ready-to-eat
(RTE) products shows similar progress. Compared to a decade ago before
HACCP was implemented, we have made substantial progress in Lm control,
as these statistics from our RTE sampling program indicate:
--In 1995, 3.02 percent tested positive;
--In 1996, 2.91 percent tested positive;
--In 1997, 2.25 percent tested positive;
--In 1998, 2.54 percent tested positive;
--In 1999, 1.91 percent tested positive;
--In 2000, 1.45 percent tested positive;
--In 2001, 1.32 percent tested positive;
--In 2002, 1.03 percent tested positive;
--In 2003, .76 percent tested positive; and
--In 2004, .55 percent tested positive.
Recalls
Another success has been the break in the annual cycle of multi-
million pound recalls and a dramatic decline in the number of recalls
each year. The number of recalls had been increasing since the mid
1990s, with at least one multi-million pound recall being conducted
every year until 2002.
For example:
--In 1997, there were 27 recalls for a total of nearly 28 million
pounds;
--Followed by 44 recalls of just over 44 million pounds in 1998;
--58 recalls in 1999 for 40 million pounds of product;
--76 recalls of almost 23 million pounds in 2000;
--87 recalls in 2001 for 33 million pounds; and
--Reaching an all-time high of 113 recalls in 2002, totaling nearly
61 million pounds.
After we implemented science-based policies for E. coli O157:H7,
Listeria monocytogenes, and Salmonella, we saw a dramatic decline in
recalls, culminating in a reduction of nearly 18 percent in the number
of pathogen-related recalls, from 28 in 2003, to 23 in 2004.
Foodborne Illnesses
Another significant measure of how our science-based policies are
making a major impact on public health is from the annual FoodNet
preliminary report published by the Department of Health and Human
Services' (DHHS) Centers for Disease Control and Prevention (CDC) every
spring [the annual report is published later each year]. I will discuss
FoodNet later, but according to the CDC, there have been significant
declines from 1996 to 2004 in illnesses caused by E. coli O157:H7,
Listeria monocytogenes, Campylobacter, and Yersinia. Compared to the
1996-98 baseline, illnesses caused by E. coli O157:H7 decreased by 42
percent; Listeria monocytogenes dropped by 40 percent; Campylobacter
fell 31 percent; and Yersinia decreased by 45 percent.
This is just raw data. To put these figures into real human terms,
in 2004, we saved at least an additional 21,815 people from suffering
the debilitating effects of a foodborne illness. That is nearly the
number of people who work inside the Pentagon on a daily basis.
Stated another way, in 2004, compared to the 1996-98 baseline, an
additional 1,939 people did not miss work because of E. coli O157:H7.
Five hundred thirty-five more people did not suffer from a high fever
caused by Listeria monocytogenes. Nearly 17,250 consumers did not have
severe abdominal cramps caused by Campylobacter. And approximately
2,100 people did not have to think, ``What did I eat?'' thanks to an
illness caused by Yersinia.
Taken together, these human health results, declines in recalls,
and decreasing numbers of pathogens in our sampling program indicate
that our risk-based approach is working, and that we are protecting
public health through a safer food supply. While this is good news, we
still have areas of concern.
Salmonella
A specific concern is Salmonella. When FSIS reported its 2003 data,
the Agency acknowledged concern that the percentage of positive
Salmonella tests had increased slightly in all three poultry
categories. While the 2004 data showed more mixed results, there was a
continued increase for young chicken (or broiler) carcasses and that
number rose again in 2005.
It is clear that the overall incidence of Salmonella infections
remains far greater than our objective. In 2004 FoodNet data, there
were 14.7 cases of culture-proven Salmonella infections per 100,000
people. This means 115 people are infected by Salmonella every day, or
42,000 every year. In my view, as someone with a medical background,
that is way too high.
The CDC's 1999 estimate of Salmonella infections is even higher.
They estimate about 1.4 million cases of infection each year, with
about 16,000 hospitalizations, 580 deaths and $3.1 billion in health
care costs.
The CDC's 2005 FoodNet report (of 2004 data) did not look any
better. While it did report that Salmonella infections dropped 8
percent, only one of the five most common strains, which accounted for
56 percent of the reported Salmonella infections in 2004, declined
significantly. That strain was Salmonella Typhimurium which declined 38
percent.
Salmonella Enteritidis and Salmonella Heidelberg neither increased
nor decreased significantly. However, incidences of Salmonella Newport
increased by an alarming 41 percent.
It is clear that we must do better if we are going to meet DHHS'
Healthy People 2010 objective for Salmonella, which is 6.8 infections
per 100,000 people. We have already met the DHHS' Healthy People 2010
objective of 1.0 cases of E. coli O157:H7 per 100,000 people. In 2004,
the CDC reported 0.9 cases of E. coli O157:H7 infections per 100,000
people.
However, I do believe there is a way this year to combat Salmonella
as I will explain later. I believe that we can leverage new
technologies and cutting edge research, not only to reach the Healthy
People 2010 objective, but to drive the numbers even lower.
Cooperation and Collaboration with Other Agencies and Food Safety
Partners
Another significant accomplishment from 2005 has been unprecedented
cooperation and collaboration with other Federal, State and local
agencies and food safety partners.
For starters, Avian Influenza has received a significant amount of
press recently. FSIS takes this animal health issue very seriously. We
will require a multi-agency effort to address this issue, and we have
embarked on such an approach. FSIS has a Memorandum of Understanding
with the Animal and Plant Health Inspection Service (APHIS), in which
FSIS agrees to promptly notify APHIS if FSIS inspection program
personnel detect signs of foreign animal disease. FSIS is also
participating in several interagency groups that include DHHS, as well
as State and local government agencies.
In food defense, FSIS has been working very closely with DHHS' Food
and Drug Administration (FDA), the Department of Homeland Security and
the National Association of State Departments of Agriculture in
developing guidelines and procedures for State and local first
responders and Federal food regulatory agencies. This interagency
response plan will facilitate cooperation with State and local
emergency efforts when responding to incidents involving the food
supply. We have already started testing these guidelines. We conducted
an exercise through our district office in California with the
California Department of Agriculture, the California Department of
Health, Environmental Protection Agency, FDA, Federal Bureau of
Investigation, CDC, and local and county health officials. We intend to
hold more of these exercises with each FSIS district office and our
partners so that we can make continuous improvements to the guidelines.
We also have been working closely with industry to help them
develop voluntary comprehensive food defense activities for every
establishment. We feel it is essential that all slaughter, processing,
import and export establishments take steps to ensure the security of
their operations. Earlier in 2005, we made available on FSIS' Web site
an ``Industry Self-Assessment Checklist for Food Defense'' and model
food defense activities that they can use to guide their actions to
defend the safety of their product. In addition, we have our inspectors
ready and trained to assist industry as they enhance the protections
they already have in place. As of this date, FSIS inspection program
personnel have conducted over 1.3 million evaluations of establishment
food defense activities and have found less than 1,500 areas that
needed to be addressed.
The model food defense activities were developed as a result of the
vulnerability assessments that FSIS conducted for selected domestic and
imported food products. These assessments allowed us to rank food
products and potential contaminating agents in order of highest
concern. Using this risk-based ranking, during periods of heightened
awareness, FSIS' laboratories examine samples for threat agents posing
the greatest risk as identified in FSIS' vulnerability assessments.
Although the findings from these vulnerability assessments are
classified, FSIS has been training industry representatives in how to
conduct the assessments. As a result, many companies are now conducting
their own assessments and taking appropriate measures to defend their
processing lines and distribution chains from intentional
contamination.
Another example of collaboration is the Food Emergency Response
Network (FERN). This joint FSIS-FDA effort of national, State, and
local laboratories provides ongoing surveillance and monitoring of food
and will promptly respond to an intentional contamination that targets
the Nation's food supply. I will discuss FERN in more detail later when
I go over our priorities for fiscal year 2007.
We are also working closely with the CDC and FDA to improve our
ability to link foodborne illness estimates with different food
vehicles. Data on foodborne illnesses due to specific pathogens also
needs to be connected with data on the prevalence of different
pathogens in specific foods.
The Foodborne Diseases Active Surveillance Network, or FoodNet
which I mentioned before, is part of CDC's Emerging Infections Program,
and it allows FSIS and our Federal, State, and local food safety
partners to integrate foodborne illness data to determine the burden of
foodborne disease, monitor foodborne disease trends, and determine the
extent of foodborne diseases attributable to specific foods. Since
1995, FSIS has worked closely with the CDC, FDA, and State and local
epidemiologists and public health laboratories in making FoodNet an
essential public health tool.
FoodNet includes active surveillance of foodborne diseases, case-
control studies to identify risk factors for acquiring foodborne
illness, and surveys to assess medical and laboratory practices related
to foodborne illness diagnosis. It provides estimates of foodborne
illness and sources of specific diseases that are usually found in the
United States and interprets these trends over time. Data are used to
help analyze the effectiveness of our HACCP rule and other risk-based
regulatory actions, as well as to develop public education initiatives.
Consumer Safety Education
Speaking of education, last year FSIS reached nearly 120 million
citizens by developing and distributing brochures, technical papers,
and booklets through the media, educators, the Agency's Web site, the
Meat and Poultry Hotline, FSIS' virtual representative ``Ask Karen,''
and the USDA Food Safety Mobile. As a medical doctor, I truly value the
importance of effective and continuous food safety outreach to
consumers. It is the key to any multi-pronged strategy to prevent
people from getting sick and possibly dying.
In fiscal year 2005, our Meat and Poultry Hotline handled nearly
88,000 consumer calls on the safe storage, preparation, and handling of
meat, poultry and egg products and over 130 media and information
multiplier calls that included requests from newspapers, magazines and
book authors along with live interviews with radio and television
stations. From a public health standpoint, we still want to serve
consumers even if an unexpected event affects the Washington, DC
metropolitan area. No one should have to suffer through a foodborne
illness after they have tried to contact our Hotline and have found it
is down due to some unforeseen incident in the capital area. That is
why in fiscal year 2006, we are expanding and upgrading the Hotline
communication equipment to ensure uninterrupted service to the public
in the case of an unexpected event.
Research has shown FSIS that the at-risk, under-served, and
Spanish-speaking populations require education and messages geared to
their needs. In fiscal year 2005, FSIS continued to develop education
programs for elderly, immune-compromised, and other at-risk
individuals, and assisted with revisions to the American Medical
Association/CDC/FDA/FSIS Diagnosis and Management of Foodborne Illness:
A Primer for Physicians. We also developed a brochure titled, What
Transplant Recipients Should Know About Food Safety. This is just one
in a series of publications that will be developed targeting other at-
risk audiences.
In an unprecedented effort to reach those underserved, yet at-risk
for foodborne illness, FSIS is cosponsoring a food safety conference
entitled, ``Reaching At-Risk Audiences and Today's Other Food Safety
Challenges,'' with the FDA, CDC, and private sector organizations. The
goals of this conference include sharing current surveillance and
epidemiological data on foodborne illness; presenting strategies
leading to enhanced food safety knowledge, skills, and abilities in the
general population and among at-risk populations; and to communicate
the latest science-based safe food handling principles and practices.
Also, FSIS produced a public service announcement (PSA) ``Fight
BAC!'' in Spanish and distributed more than 50,000 copies to a
national network of physicians' offices. In addition to being able to
view the PSA, patients had access to flyers describing listeriosis, a
foodborne illness more common in the Hispanic population.
The USDA Food Safety Mobile that I mentioned earlier tours
nationwide to support food safety education efforts and reach consumers
where they live. In fiscal year 2005, the Mobile appeared at State and
county fairs, food events, media events, schools, libraries, grocery
stores, community events, parades, festivals, health and safety expos,
trade shows, conventions, FSIS District Offices, and at FSIS events in
conjunction with visits and presentations by USDA officials. Hundreds
of thousands of educational items have been distributed and millions of
consumers have been reached through media coverage of the Mobile. Since
its launch in March 2003, the Food Safety Mobile has traveled more than
66,000 miles, appearing in 247 events in approximately 185 cities, in
48 States and the District of Columbia.
Hurricane Katrina Response
The Mobile was a vital component of our Hurricane Katrina response
strategy. We deployed it in September 2005 to areas affected by
Hurricane Katrina to provide firsthand food safety education and
assistance to prevent any outbreaks of foodborne illness. I realized
that food safety would not be one of the top priorities with many of
the affected populace, given that they were displaced, grieving the
loss of loved ones, or looking for missing family and friends. However,
we were gravely concerned about the public health consequences of the
hurricane's aftermath. With power outages and flooding of contaminated
water, the potential for people consuming contaminated food was
alarmingly high, which was why I ordered the Mobile to immediately
abandon its previously scheduled course in the Northeast and head down
to the Gulf Coast. I also directed FSIS to lease a second Food Safety
Mobile to go to the affected areas.
During its two-and-one-half month tour of the Gulf States, the Food
Safety Mobile reached nearly 41,000 total consumers and distributed
food safety brochures, bleach, hand wipes and thermal bags. The second
Mobile appeared at 18 events, reaching an additional 15,000 consumers.
In addition to our swift and aggressive consumer outreach, FSIS
worked as rapidly as possible with industry to resume operations at
meat, poultry and egg product establishments in the affected areas of
the Gulf States. By September 5, 2005, FSIS had deployed approximately
30 additional inspection program personnel and compliance staff
personnel to this area so these plants could quickly resume operations.
These personnel also oversaw the appropriate disposal and
decontamination procedures at the plants.
On September 20, 2005, FSIS began increased Salmonella testing of
raw meat and poultry products in the affected areas of the Gulf Coast
to provide microbial data to compare with nationwide data. FSIS also
trained additional non-field staff to assist in conducting intensified
verification tests in ready-to-eat establishments for Listeria
monocytogenes, including collecting food-contact surface and
environmental samples, to supplement product sampling and food safety
assessments. These provided an additional layer of microbial testing
and verification to ensure the safety of the ready-to-eat meat
products.
Building the Foundation of a More Robust Risk-Based Inspection System
The successes from 2005 are varied and significant, ranging from
reductions in pathogen prevalence to a quick and concerted response in
the aftermath of Hurricane Katrina. The examples I just covered
indicate that our food safety system works and is strong. However, I do
not want to serve as just a caretaker of a good system.
Even though FSIS has accomplished a lot, people still get sick and
die each year from consuming contaminated food. As a medical doctor,
that simply does not set well with me. I did not accept this job last
year to recall hamburger, ham, sausage or any other product on a
routine basis. I want to focus our time and valuable resources on
prevention, rather than on response. It is a common sense, cost-
effective public health strategy that best serves the American
consumer.
However, in order to move forward with this approach, we are going
to need the help of everyone along the farm-to-fork continuum and
Congress. I know with your support, we can further improve upon the
food safety successes that we have already seen.
The cornerstone of our strategy is to move forward on implementing
a more robust risk-based inspection system. Our current system, while
strong, is not suited to the future realities of food safety and public
health, and we will need the new capabilities offered by an enhanced
risk-based system.
Our 100-year old inspection system was based on visual examination
for visible signs of disease. The future demands that we be able to
focus more on things that the human eye cannot see, things the nose
cannot smell, and things the fingers cannot feel.
We will also need the ability to anticipate and quickly respond to
food safety challenges before they negatively affect public health.
This is vital, as is a system that will allow us to use our finite
resources more effectively and efficiently to further improve food
safety. As a public health agency, we must have the capability and
capacity to be smarter and act more efficiently, quickly and flexibly.
This means a move away from a regulatory agency that protects
public health by recalling dangerous product or withdrawing marks of
inspection toward one that is focused on actively preventing foodborne
illnesses from ever occurring. However, it is important to note that
FSIS already uses a risk-based approach to food safety. Our goal is to
further enhance and strengthen that system so that we are prepared for
the food safety challenges in the next century. This is why we are
requesting in the fiscal year 2007 budget an increase of $2.6 million
to help us move toward our goal of a more robust risk-based inspection
system.
To continue our progress toward a more robust risk-based inspection
system, we need to be sure that we communicate openly and often with
all of our food safety stakeholders. We will use a transparent and
inclusive process to seek input on a wide range of issues related to
creating a more robust risk-based inspection system.
We will proceed through a public process, gaining input from all of
our stakeholders. At the last meeting of the National Advisory
Committee on Meat and Poultry Inspection (NACMPI) in November, the
Committee recommended a third-party approach to assist us in reaching
out to, and gaining input from, our stakeholders. For this purpose, we
are now in the process of selecting a third party. We have already
established a NACMPI subcommittee to provide regular, ongoing guidance.
It is important that we ensure everyone participates in this process.
In fiscal year 2007, we plan to advance risk-based inspection in
processing establishments through team inspection. This approach will
utilize Agency-developed measures, which gauge an establishment's
inherent hazard; monitor how well establishments are controlling
hazards and complying with regulatory requirements; and provide for
risk-based verification testing for Listeria monocytogenes in ready-to-
eat products and the environment, and for Salmonella and E. coli
O157:H7 in raw products.
Effective implementation of team inspection in processing and risk-
based verification testing will require not only workforce training for
risk-based inspection, but also implementation support activities to
ensure consistency of application after training.
As part of a comprehensive risk-based inspection system, we will
develop risk-based verification strategies for meat and poultry in
commerce that can be used by FSIS personnel. Such activities would
complement inspection activities performed in-plant. This initiative in
fiscal year 2007 covers the cost of testing the policies, methods, and
information technology (IT) applications to determine which mix
provides the best consumer protections within FSIS' regulatory
authority.
Data obtained through surveys enable the Agency to base policies
and regulations for inspection on a comprehensive understanding of the
measures taken by establishments to reduce foodborne risks and the
efficacy of such measures as processing technologies and pathogen
reduction interventions. These surveys will be used to measure the
potential impact of proposed regulatory changes, identify which
segments of the industry may be achieving a regulatory standard, and
identify improvements other establishments will need to make to achieve
the standard.
Risk-Based Salmonella Control
Part of the $2.6 million request for risk-based inspection is for
risk-based Salmonella control, which amounts to $602,000. Given the
challenge we face with Salmonella that I mentioned earlier and the fact
that there has been an increasing concern about outbreaks attributed to
emerging and multi-drug resistant strains of Salmonella, it is
imperative that we take a risk-based approach to investigating and
controlling the incidence of Salmonella in meat, poultry and egg
products.
Since the prevalence rate in broiler chickens seems to be a trouble
spot, we are looking into revising the performance measure for
Salmonella on this particular product. Since 1998, FSIS has used the
prevalence of Salmonella on broiler chickens, which is a regulatory
performance standard for the production of raw poultry carcasses
(broilers), to measure the Agency's performance in achieving its goal
of reducing foodborne illness.
However, FSIS has identified three weaknesses with the current
measure. The first one is that the measure is scientifically unsound.
The FSIS regulatory testing program that is the source of the data used
in the current performance measure does not provide a true measure of
prevalence of the pathogen.
The second weakness is that the current measure overlooks an
important public health issue. The current measure is for generic
Salmonella, including those that are not attributed to foodborne
illness. Not all serotypes of Salmonella are equally dangerous for
humans. There are many known serotypes of Salmonella found in broilers,
some of which cause human illness with varying severity. In fact, the
most common serotype is not a significant factor in human foodborne
illness.
The third weakness is that the current testing program is not
consistent with FSIS' goal of transitioning to a more risk-based
inspection system. Plant process controls for Salmonella vary widely.
Since 2003, aggregate percent positives in sample sets have increased
each year from 11.5 percent in 2002, to 16.3 percent in 2005 while
still remaining within regulatory performance standards. In order to
improve program performance, FSIS is working to strengthen its
verification testing program by making it more risk-based.
Recognizing these weaknesses, FSIS will develop a new performance
measure that more accurately measures:
--Agency performance in achieving its goal of reducing foodborne
illness; and
--Plant performance, including identification of those plants that
are most likely to have Salmonella serotypes that cause human
illness.
FSIS has analyzed data from approximately 7 years of regulatory
testing for Salmonella in broilers. The Agency found strong evidence
that plants that have consistently achieved a percent positive rate in
sample sets at or below half the current regulatory performance
standard are less likely to produce raw product that have the serotypes
of Salmonella that are causes of human illness. Since these plants have
been successful in controlling overall Salmonella to low levels, they
would also have low levels of serotypes that are causes of human
illness.
As a result, achievement of performance goals established under the
new measure would provide a better indication of process control and
relate more directly to the improved safety of broilers. Consequently,
we are developing a new measure to replace the existing Salmonella
performance measure that would demonstrate the potential for reduction
in exposure of humans to the serotypes of Salmonella most commonly
associated with human illness.
As we move forward on Salmonella, much can be learned from the
success from our risk-based model dealing with E. coli O157:H7. In
2002, FSIS issued a Federal Register notice to manufacturers of raw
ground beef to conduct reassessments of their HACCP plans. Our
scientifically trained personnel conducted food safety assessments
through the first-ever, comprehensive reviews of all-beef products. The
reassessments and enhanced process control by plants, with assessments
by FSIS and testing, led to reductions in E. coli O157:H7 percent
positives in FSIS' verification testing program.
Using this model, we are planning to re-evaluate the broiler
industry's process controls for serotypes of Salmonella that cause
human illness. We will use food safety assessments as tools to reassess
higher risk plants, which have the greatest potential to operate above
the existing Salmonella performance standard. A food safety assessment
is a systematic evaluation of a plant's scientific basis, design,
validation and execution of its HACCP plan. In an example of how
effective food safety assessments are, one broiler plant had a 30
percent positive Salmonella rate. After our enforcement, investigation,
and analysis officers conducted the assessment, the plant has a two
percent positive Salmonella rate and is holding steady. This is the
kind of result we anticipate for Salmonella.
Outreach to Small and Very Small Plants
In order to move forward with a more robust risk-based inspection
system, we need to have the support of industry. All plants need to
fully embrace HACCP, and a critical sector of the industry we regulate
are small and very small plants, which comprise the majority of the
plants we oversee each day.
We realize that small and very small plants have unique needs when
it comes to full-scale HACCP implementation and that they might not
have as many resources as large plants do. Therefore, I made an
absolute priority of increasing the communication between FSIS and the
small and very small plants so that we can identify and respond to
their needs faster and more efficiently with regard to full-scale
implementation of their HACCP plans.
Since September 2005, we have held listening sessions for small and
very small plant owners and operators in Montana, California and
Pennsylvania. These sessions gave us a better understanding of what was
causing gaps between a plant's performance and our expectations for
them to operate under HACCP. As a result, we have taken several actions
to remedy any misunderstanding and deliver what small and very small
plants need to embrace HACCP effectively.
I do believe that education facilitates a greater understanding and
helps close any performance gaps in implementation of HACCP plans. It
also keeps FSIS from having to take enforcement action on
establishments. I would be much happier with a solution that calls for
increased education rather than for increased regulation; however, I
have made the point to industry that we will do whatever it takes to
ensure that a robust HACCP system is implemented and maintained in each
and every plant, large or small. Public health is our responsibility
and we will take regulatory action as necessary.
This is absolutely necessary to move forward because when a child
eats a hamburger, that burger should be as safe as it possibly can be,
regardless of the size of plant it comes from. If that child gets E.
coli O157:H7 or Salmonella, then that child, the child's parents and
the child's doctor do not care what size that plant was, or how much
ground beef it produced.
Workforce Training
In addition to industry's complete embracing of HACCP, training
FSIS' workforce is a key component to ensure a robust risk-based
inspection system. I understand that it requires a large investment in
FSIS employees to ensure they have the training and skills they need to
be successful in a risk-based environment. However, it is an investment
that I know will continue to provide food safety dividends well into
the future. If they succeed, then the American consumer is better off
as well.
Training enables inspection program personnel a wider range of
opportunities to make a real difference in public health, and it also
opens new avenues of career advancement to our employees. I also
believe training improves job satisfaction, which leads to increased
employee retention and recruitment.
One of the Agency's top priorities in recent years has been to
aggressively address the training and education of its workforce. We
truly appreciate the support you have provided for us to pursue this
goal. The increased workforce capabilities made possible by the changes
and improvements in FSIS training have led to measurable improvements
in public health, as I mentioned before using the data from the CDC.
The declines in pathogen contamination further demonstrate that your
support for our investment in training is a critical component of our
public health infrastructure.
Public Health Communications Infrastructure
Another critical building block for the foundation of a robust
risk-based inspection system is to have a public health communications
infrastructure that has the ability to collect, assess and respond to
data in real-time. This is why we are requesting $1.9 million in fiscal
year 2007 to enhance our communications infrastructure.
It is vital for our in-plant personnel to have this data in real-
time in order to do their jobs properly and effectively. If they can do
their jobs effectively, then FSIS will be able to react more rapidly in
a crisis to better protect public health and ultimately save lives.
Enhancing effective field communication capabilities has been a
major goal of FSIS. Yet, while these efforts are continuing,
approximately 40 percent of FSIS' field inspection workforce remains
without timely communication capabilities. Part of the $1.9 million
request for the communications infrastructure would be $615 thousand
dedicated specifically toward inspector communication enhancement. With
a need for increases in food safety assessments, enforcement actions
and increased readiness, timely communication is vital to more
effectively protect consumers.
We need to continue the progress we have been making in replacing
dial-up connections with high speed telecommunication lines for our
field force. High-speed access enables us to receive real-time data and
thus react more quickly to protect the public health. It is also an
essential time-saving and cost-saving mechanism that makes management
of the Agency's operations more efficient in the long run. We provided
high speed telecommunication lines first to slaughter establishments
with inspection personnel having bovine spongiform encephalopathy
regulatory enforcement responsibilities. In fiscal year 2006, we are
continuing this strategy of bringing broadband service to over 2,300
base plant locations.
In addition, the rapid pace of technological change in operating
systems, application software and hardware, as well as the failure/
repair rates for equipment, necessitates the replacement of computers
every 3 years. The $1.3 million requested for computer replacements
will enable FSIS to meet the demands of major operating system changes
and eliminate the need for warranties extended beyond 3 years and
expenditures not covered by the warranties. We need to ensure our
compliance officers, supervisory and inspection program personnel, as
well as State inspection personnel receive replacement computers. At
present, this accounts for about 4,000 microcomputers in the field, and
our goal is to replace 1,300 to 1,400 computers annually.
Food Emergency Response Network
To continue the advancements in food defense that I mentioned
earlier, we are asking for an increase of $15.8 million for food and
agriculture defense. A major component of this request would be
allocated for the Food Emergency Response Network (FERN), which I also
mentioned earlier.
Consumer safety and public health protection will be enhanced
through FERN. This will be possible through achieving FERN's four
primary objectives. The first objective is to help us and partnering
agencies prevent, or at least mitigate the brunt of, any attacks on the
food supply through surveillance testing. The second objective is to
prepare for emergencies by strengthening laboratory capabilities
through the development and validation of analytical methods, analyst
training and proficiency testing. The third objective is to respond to
threats, attacks and emergencies in the food supply by providing a
communications network and the necessary laboratory surge capacity. And
the final objective is to provide laboratory support for investigations
of, and recovery from, terrorism-related events.
Being able to respond rapidly to a sudden surge in demand for
testing is imperative, if we are going to restore consumer confidence
in the safety of the Nation's food supply and to maintain U.S. economic
stability in spite of the event. We only need to look back at the
anthrax attacks in the autumn of 2001 to learn a valuable lesson. Only
a few envelopes containing traces of anthrax were opened and only a few
people died.
But what happened in this bioterrorism event was that all Americans
became fearful of exposure to anthrax when they came in contact with
any white, powdery substance. Demand for laboratory testing of these
substances was nationwide, and most laboratories did not have the
necessary resources to handle this surge, causing prolonged delay
before people knew if they had been exposed or not, putting a great
burden on the Nation's psyche.
When I worked in Nebraska's Department of Public Health, we had set
up and maintained an effective laboratory testing system that could
handle surge capacity within that State, whether it was for events
stemming from intentional acts or Mother Nature. If we had not built
such capacity, then only a few State laboratory technicians would have
been inundated with West Nile virus testing when the virus hit
Nebraska. We had an integrated system, so that when West Nile did
become a public concern, we were able to call upon laboratory
technicians from hospitals and universities to start testing for the
virus. Having several hundred laboratory technicians test for West Nile
as opposed to having only several do the job was certainly a much more
sensible and effective public health strategy.
If something were to happen in the food and agriculture sector that
would cause public alarm, then our current system simply would be
inundated. FSIS has three regulatory sampling laboratories and they
work great under normal conditions. However, we need the surge capacity
to help us handle at least three potential likely scenarios. The first
one would be a hoax--let's say someone or some organization claims they
have contaminated the food supply, but have not. The second would be an
actual attack on the food supply by an individual or group. The third
would be an outbreak stemming from an act of Mother Nature. In all
three cases, there would be mass public concern and significant
economic consequences. In the last two cases, there could potentially
be hundreds, perhaps thousands, of people getting sick and dying. The
sad reality is that we do not at this time have a laboratory system
effective enough to handle the surge capacity if one of these three
scenarios were to happen today or tomorrow.
This is why FSIS' $13 million request for FERN will help provide
participating laboratories with the necessary training, laboratory
equipment and supplies so that we can handle surge capacity and achieve
the other three objectives I mentioned earlier. From a public health
standpoint, an investment in FERN is an absolute essential priority if
we want to prevent, or mitigate, the loss of life and economic hardship
if an intentional or unintentional incident affecting the food supply
were to happen.
FISCAL YEAR 2007 BUDGET REQUEST
I appreciate having the opportunity to discuss a number of FSIS'
accomplishments and priorities with you. Now, I would like to present
an overview of the fiscal year 2007 budget request for FSIS.
Implementation of these budget initiatives is imperative to helping
us attain FSIS' public health mission. In fiscal year 2007, FSIS is
requesting an appropriation under current law of $862.9 million.
Supporting FSIS' Basic Mission
The FSIS budget request for fiscal year 2007 supports the Agency's
basic mission of providing continuous food safety and inspection in
each meat, poultry, and egg products establishment in the United
States.
The Agency's permanent statutory obligation is to provide
continuous inspection of meat, poultry, and egg products is a labor
intensive mandate, thereby making its salary cost relatively
inflexible. An increase of $16 million for the FSIS inspection program
is requested to provide for the 2.2 percent pay raise for FSIS
employees in fiscal year 2007 to assure that the Agency is provided
sufficient funds to maintain programs. Failure to provide the full
amount for pay and benefit costs jeopardizes the effectiveness of FSIS
programs and weakens food safety.
We also seek an increase of $1.9 million for Agency efforts to
support the President's Management Agenda in the area of IT. As I
pointed out earlier, the Agency is seeking ways to have electronically
stored information from all FSIS personnel integrated and available in
real-time. This would allow inspectors ready access to information
necessary to protect the public health.
As I mentioned several times, as someone with a medical background,
I view the bottom line of preventing foodborne illness and saving lives
very stringently. My focus is on prevention, and I believe the request
for increases of $2.6 million for risk-based inspection and $15.8
million for food and agriculture defense will move us where we need to
be to further enhance public health protection.
In order to facilitate cross-agency coordination of information,
FSIS seeks an increase of $600,000 for International Food Safety in
order to link to the International Trade Data System managed by the
Department of Homeland Security's Customs and Border Protection.
User Fees
Inspection services for the cost of Federal meat, poultry and egg
products during all approved shifts are now paid with Federal funds.
Legislation will be re-submitted to Congress, which would provide USDA
with the authority to collect fees for inspection services beyond one
eight-hour shift per day, saving significant Federal costs by
transferring these costs to the industries that directly benefit from
services performed. New industry costs would be a small fraction of one
cent per pound of production, but would allow FSIS to ensure a safe
food supply. Of the $862.9 million requested in the fiscal year 2007
budget, $105 million is proposed to be derived from these user fees.
CLOSING
We will continue to engage the scientific community, public health
experts, and all interested parties in an effort to identify science-
based solutions to public health issues to ensure positive public
health outcomes. It is our intention to pursue such a course of action
this year in as transparent and inclusive a manner as is possible. The
strategies I discussed today will help FSIS continue to pursue its
goals and achieve its mission of reducing foodborne illness by
protecting public health through food safety and security.
Mr. Chairman, thank you again for providing me with the opportunity
to address with the Subcommittee and submit testimony regarding the
steps that FSIS is taking to remain a world leader in public health. I
look forward to working with you to improve our food safety system,
ensuring that we continue to have the safest food supply in the world.
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Prepared Statement of Dr. Barbara J. Masters, Administrator, Food
Safety and Inspection Service
Mr. Chairman and members of the Subcommittee, I am pleased to be
here today as we discuss public health and the U.S. Department of
Agriculture's (USDA) fiscal year 2007 budget request for the Food
Safety and Inspection Service (FSIS).
This year marks the 100th anniversary of the passage of the Federal
Meat Inspection Act (FMIA), which ushered in a new era of food safety
on the national level. Although FSIS was established under its current
name by the Secretary of Agriculture on June 17, 1981, our history
dates back prior to 1906. Our mission is to ensure that meat, poultry,
and egg products distributed in commerce for use as human food are
safe, secure, wholesome, and accurately labeled. FSIS is charged not
only with administering and enforcing the FMIA, but also the Poultry
Products Inspection Act (PPIA), the Egg Products Inspection Act (EPIA),
portions of the Agricultural Marketing Act, and the regulations that
implement these laws.
At FSIS, we are committed to the idea that an effective food safety
and food defense system must be rooted in science. To meet its goal of
protecting public health, FSIS will continue to review policies and
regulations in light of what the science demands. We will also work
with interested parties to modernize and enhance our inspection and
food safety and defense verification efforts. All of this is necessary
if we are to fulfill our public health mandate and stay ahead of the
evolving threats to America's food safety.
I am pleased to report that progress is being made in measurable
and significant ways. An effective gauge of how our scientific policies
are working is looking at how public health is positively impacted. Our
efforts are clearly on the right track, as evidenced by the decline in
foodborne illness over a recent 6-year span. For instance, the Centers
for Disease Control and Prevention (CDC) last spring reported continued
reductions in foodborne illnesses from 1996-1998 through 2004 stemming
from E. coli O157:H7, Listeria monocytogenes, Campylobacter, and
Yersinia. The report indicates that reductions in foodborne illness
reported in 2003 were not an isolated event and that sustained progress
is being made toward reducing illness from very dangerous foodborne
pathogens.
While these reported declines in foodborne illness are dramatic, we
believe more can--and will--be done. We will realize further progress
in the food safety dynamic by implementing a more robust, risk-based
inspection system.
The foundation of this system will be the ability to anticipate and
quickly respond to food safety challenges before they have a negative
impact on public health. While FSIS incorporates risk assessments in
our approach to food safety, our goal is to further strengthen the
system so that inspection program personnel may more effectively
anticipate problems before they happen. A more robust, risk-based
inspection system will ensure that our Agency's resources are used in
the most effective and efficient way possible. We need a more robust
system to help us meet future food safety challenges, some of which are
either evolving or unknown today. An optimal risk-based inspection
system is what FSIS is striving to achieve, and it will continue to
guide our activities in fiscal year 2007.
Ensuring the safety of America's meat, poultry, and egg products
requires a strong infrastructure. To accomplish this task, FSIS has
dedicated public health servants stationed throughout the country and
in laboratories, plants, and import houses everyday. In fiscal year
2005, the Agency had approximately 7,600 full-time personnel protecting
the public health in 5,870 Federally-inspected establishments
nationwide. FSIS inspection program personnel performed ante-mortem and
post-mortem inspection procedures at 1,700 slaughter establishments to
ensure public health requirements were met in the processing of 140
million head of livestock, 9.4 billion poultry carcasses, and about 4.3
billion pounds of liquid egg products. In fiscal year 2005, FSIS
inspection program personnel also conducted over 8 million procedures
to verify that establishments met food safety and wholesomeness
requirements. In addition, during fiscal year 2005, approximately 4.3
billion pounds of meat and poultry and about 8.4 million pounds of egg
products were presented for import inspection at U.S. ports and
borders.
In an Agency the size of FSIS, with employees stationed all around
the country, it quickly became apparent to me that effective
communication was central to our mission. I have made improved
communication a major priority, and we have greatly enhanced our
communications tools including a redesigned, consumer-friendly Website;
the debut of an Intranet for employees where they can access important
and vital information; the launch of ``all-employee'' meetings via Web-
cast; and more regular communications from the Administrator's office
to the field. We continue to work on communications enhancements in
order to ensure our entire workforce remains fully knowledgeable about
the Agency's mission and goals.
Fulfilling our public health mandate to ensure a safe and wholesome
food supply is a demanding responsibility and an exciting challenge. I
would like to thank you for providing FSIS with the resources to
protect meat, poultry, and egg products. For fiscal year 2006, FSIS
received $837.7 million ($829.4 million after rescission), and these
funds are helping to move the public health agenda forward. For
instance, for fiscal year 2006, Congress approved $2.2 million in
additional funds for frontline inspection. This funding is enabling us
to hire additional supervisory consumer safety inspection personnel,
thus freeing up time for Public Health Veterinarians to focus on more
complex and demanding food safety projects such as conducting food
safety assessments and focusing on the design of food safety systems.
Further, the additional funding you have provided us in the area of
food defense has helped the Agency in further developing our response
to contamination of the food supply, whether intentional or accidental.
I will provide additional information on both these subjects later in
this document.
Today, I would like to share with you how we will further implement
a more robust, risk-based inspection system, as well as some of our
leading pathogen control efforts; our enhanced outreach to small and
very small plants; our workforce training initiatives; our food defense
activities; and our public health communications programs.
FSIS' Six Priorities
First, I want to reiterate that the Agency operates under six
operational priorities, which I first shared with you 2 years ago. FSIS
continues to hold itself accountable for improving public health. When
we established these priorities, we outlined a series of actions to
enable us to better understand, predict, and prevent contamination of
meat and poultry products to improve health outcomes for American
families. Since then, we have been building upon these priorities, all
equally important, and continue to improve the Agency's infrastructure
with a greater attention to risk so that we can continue improving our
performance under the public health model. I should note that even
though our priorities remain the same, we are constantly raising the
bar so we can move forward to enhance public health protection. These
priorities are building the infrastructure for further implementation
of a more robust, risk-based inspection system.
Continuing Evolution of Inspection and Enforcement: The Three Pillars
The first major initiative I want to discuss today is the
continuing evolution of inspection and enforcement. The evolution of
inspection and enforcement is most closely aligned to our building a
more robust, risk-based inspection system. (See Attachment.)
This process can best be described by an illustration we have often
used at FSIS. Namely, a more robust, risk-based system is a major
structure built on a strong foundation with three pillars providing
support. The pillars, taken together, maintain the system's integrity.
The three pillars are: industry, FSIS personnel, and consumers.
The Hazard Analysis and Critical Control Point (HACCP) system is
the core of the industry pillar, and FSIS has a vital role in
educating, as well as regulating industry's ability to achieve a
positive outcome. Industry, for its part, is responsible for designing
and implementing an effective food safety system. In this regard, we
have been enhancing our outreach efforts, especially to small and very
small plants, which I will describe later in this document.
The FSIS personnel pillar is necessary so that we can collect,
assess, and respond to public health data. Our verification must be
uniform and consistent, especially in areas of greatest risk. Under a
more robust, risk-based inspection system, we must use science as our
guiding principal. In other words, we follow the core functions of the
public health model--assessment, policy development, and assurance.
Thus, the type and intensity of inspection at each plant would be
determined by an analytical process which allows our inspectors to
foresee problems so they can focus their efforts at plants and in
processes that pose a public health risk. But in order to reach this
point, we must develop a new system that will allow us to collect,
assess, and respond to public health data. This need is emphasized in
our budget request.
The third pillar is one which represents consumers. Consumers--
including all of us here today regardless of title--need to have
confidence in a safe and well-defended food supply.
As we move towards a more robust, risk-based inspection system, our
goal is to ensure that we receive input from all stakeholders
(industry, employees, and consumers) along every step of the process.
We need to ensure that all food safety partners are aware of the
expectations and goals and have had the opportunity to provide input in
moving towards a more robust, risk-based inspection system.
Risk-Based Pathogen Controls
FSIS' Listeria monocytogenes verification sampling is a good
example of how we have taken a more risk-based approach in processing
plants. Under this initiative, FSIS tailors its verification activities
to the interventions that plants choose to adopt and to the potential
for Listeria monocytogenes growth in their products. In other words,
FSIS conducts less sampling in those plants that have the best Listeria
monocytogenes control programs and more sampling in plants that adopt
less vigorous programs. Thus, plants have an incentive to do more to
control Listeria monocytogenes.
Considering all the progress that has been made in reducing
Listeria monocytogenes, E. coli O157:H7, Campylobacter, and other
pathogens, FSIS believes that it is time to enhance the risk-based
approach to investigating and controlling the incidence of Salmonella
in meat, poultry, and egg products. Salmonella is the most frequently
reported foodborne illness in the United States, causing culture proven
cases of foodborne illness at a rate of 14.7 per 100,000 population.
The Department of Health and Human Services' (DHHS) Healthy People 2010
calls for a rate of Salmonella infections of 6.8 per 100,000
population. We have a long way to go.
Salmonella includes over 2,300 serotypes, all of which are
considered pathogenic in humans. Although most of the reported cases in
the United States are associated with a relatively small number of
serotypes--some of which are commonly found in raw meat and poultry
products--there has been increasing concern about outbreaks attributed
to relatively rare strains of Salmonella resistant to multiple
antibiotics.
While the Agency responds quickly to positive findings of
Salmonella linked to human illness at any establishment, our risk-based
Salmonella approach for raw product would help us be proactive before
human illness is associated with our regulated products rather than
reactive. It is essential that FSIS proceeds with its new Salmonella
performance measure because it more accurately reflects Agency
performance in reducing foodborne illness and plant performance in
reducing the pathogen in its processes. Our risk-based Salmonella
approach would also provide us with an early warning capability for the
high-risk Salmonella serotypes from meat, poultry, and egg products in
particular geographic areas.
Our budget request would allow us to fully characterize isolates;
initiate a Food Safety Assessment at a high-risk establishment before
an outbreak occurs rather than as part of the investigation of why an
outbreak has occurred; conduct more testing in areas where a cluster of
serotypes is identified to determine if an unusual prevalence is
occurring; and continually feed to CDC and State public health
officials any data concerning patterns. We are requesting $602,000 for
this risk-based Salmonella approach.
In many ways, our foundational work has already started. We held
public meetings to work with our stakeholders to find ways to reduce
food safety hazards. In August 2005, for example, we held a public
meeting on Advances in Pre-Harvest Reduction of Salmonella in Poultry
in Athens, Georgia. The meeting, with over 208 participants, focused on
research and practical experiences aimed at reducing Salmonella at the
poultry production level, or before poultry reaches Federally-inspected
plants. Based on input from the meeting and other information available
to us, we are developing compliance guideline materials for producers
that address pre-harvest food safety and Salmonella control. We held a
second public meeting on February 23 and 24, 2006, in Atlanta, Georgia,
which outlined new approaches to in-plant controls for Salmonella.
Approximately 150 attended the meeting, with close to 100 joining the
meeting by phone or netcast; the netcast was available both days. This
meeting discussed new FSIS actions for encouraging industry to control
Salmonella. Both of these meetings served as important steps in our
foundational work.
Funding Progress
As a more robust, risk-based inspection system is the Agency's
number one priority, we are requesting $2.6 million for this risk-based
effort in fiscal year 2007. I will go over in more detail the specific
funding needs for these efforts later when I review our budget request.
However, it is worth highlighting here the following ways in which the
Agency will prepare for the further evolution of the risk-based system
through the improvement of Agency support:
--$602,000 Salmonella risk-based inspection system approach described
above.
--Advance risk-based inspection in processing establishments through
reprogramming databases to better assess plant data to
determine where to sample based on risks to public health.
--Development of risk-based verification strategies for meat,
poultry, and egg products in commerce that can be used by FSIS
personnel. We will collaborate with State, local, and public
health officials at the retail level to determine strategies
for enhanced consumer protections within our regulatory
framework. These activities would complement inspection
activities performed in-plant.
--Use of data to base policies and regulations for inspection on
information obtained that defines measures taken by
establishments to reduce foodborne risks and the efficacy of
measures implemented to reduce risk, e.g., pathogen reduction
interventions.
--Use of new technologies to increase the effectiveness of the risk-
based inspections that inspectors perform including such things
as rapid tests for residues and microbes.
Training, Education, and Outreach
The next priority I want to discuss is training, education, and
outreach. Training is the foundation of our public health successes and
a key element in our strategy to meet the Healthy People 2010 goals.
All employees need to be equipped with the knowledge and technical
expertise to operate within a public health framework, and the Agency
has made great strides in achieving a well-trained workforce that is
not only able to identify threats to the public health, but also to
anticipate possible threats. We continue to have a need for training
and are moving beyond the entry level and basic HACCP training provided
to our workforce. As new employees join the Agency, they still require
the basic training. With ongoing changes in policy, and as we move to a
more robust, risk-based inspection system, new training and refresher
training will be needed by all employees. Additionally, we are
beginning to explore intermediate and advanced training opportunities
for our employees. Based on new, innovative ways of reaching our
employees, the Agency is using its existing budget to conduct this
training.
It has been easier to reach our employees and provide them training
with the implementation of our regional training system to deliver
vital training courses closer to employees' worksites. This innovative
program ensures that our workforce receives critical scientific
training in a timely manner. Providing this training efficiently and
effectively has been a key element in the on-going reductions of
foodborne pathogens.
Due to improvements FSIS has made to its training program, 100
percent of those hired as entry-level employees, as well as those who
are promoted into inspection and enforcement occupations, now receive
mission-critical training within 1 year of entering Agency duty. Many
of these employees will receive the training within the first 6 months
of being hired, or sooner.
FSIS' Food Safety Regulatory Essentials (FSRE) training program has
equipped inspection program personnel in verifying an establishment's
HACCP system. Customized HACCP training is then provided, based on the
types of products being produced at the establishments where inspectors
are assigned. Approximately 1,400 FSIS employees received FSRE training
in fiscal year 2005, and an additional 1,200 are slated to complete
this customized job-training program this fiscal year. We continue to
provide specialized training to our Public Health Veterinarians (PHVs),
and this year, for the first time, this training will be required as a
condition of employment, meaning that employees must successfully
complete the curriculum in order to remain in our workforce. Since
being launched in fiscal year 2004, over 230 PHVs have received the 9-
week classes. We plan to hold eight PHV training classes this year,
reaching nearly 200 people.
We are also partnering with other Federal agencies to leverage
resources for training. FSIS PHVs are trained to identify signs and
symptoms during ante-mortem and post-mortem inspection that could
potentially signify the presence of a foreign animal disease or
suspicious condition, and they learn the appropriate response and
reporting procedures. Working closely with our sister agency, the
Animal and Plant Health Inspection Service, we are developing a
training module on this issue that is available anytime, anywhere
through the Department's AgLearn system. The course is also currently
available through CD-ROM.
In addition, we recognize that we employ individuals who must
maintain their professional licenses. That is why we became a certified
continuing education units outlet so that many of our courses can be
utilized by the PHVs to obtain continuing education credit.
FSIS is also in the midst of a comprehensive, multi-year training
and education effort designed to ensure that every FSIS employee fully
understands their role in preventing, or responding to, an attack on
the food supply. Efforts began in fiscal year 2002 with food defense
awareness training for supervisors. Since then, we have expanded with
contracted anti-terrorism training that was provided to more than 5,000
field and headquarters employees. Food defense awareness training is
also being conducted with local partners, such as State and local
inspectors, in a cooperative effort with other Federal agencies (Food
and Drug Administration, USDA/Food and Nutrition Service, and USDA/
Agricultural Marketing Service).
With a regional approach to training, we have been able to deliver
training faster and more efficiently to employees entering mission-
critical occupations. Through e-learning techniques, we have been able
to distribute training materials more rapidly to the workforce on vital
issues such as bovine spongiform encephalopathy (BSE) policy. Through a
policy of training as a condition of employment, we have also been able
to ensure that all employees have the competencies to perform
successfully. The regional approach also allows us to better leverage
our resources so that our trainers can also provide outreach and
education to small and very small plants, as well as in the course of
interacting with their FSIS colleagues.
FSIS is exploring a wide range of methods to reach its
geographically dispersed workforce with on-going training updates. The
newest vehicle FSIS has used is netcast. Most recently, Export
Verification training was provided to inspection program personnel via
netcast at establishments that produce beef products for export under
Export Verifications programs.
We know that for a more robust, risk-based inspection system to be
successful then all plants must have well-designed, food-safety
systems. To that end, we have been enhancing our outreach efforts,
especially to small and very small plants, to ensure everyone is
meeting the same requirements. We are significantly changing the
dynamic of our workforce in order to improve our outreach efforts in
this area. It is clear to us from our existing communication efforts
that effective outreach can lead to important changes in food safety
designs by industry. Small and very small plants are also part of the
industry pillar that supports a more robust, risk-based inspection
system, and any performance gaps that exist between them and the larger
plants needs to be closed.
One method we know is succeeding in this area is our actions
following Food Safety Assessments (FSA), which have remained consistent
over the past 3 years. For example, out of 1,501 FSAs conducted in
2005, 912 of the establishments were found in compliance. We believe we
have a vital role in educating and regulating industry to achieve this
outcome, so we are assessing all aspects of our industry outreach. In
2005, we held outreach and listening sessions with small and very small
plants in Montana and California. Early this year, we held two more in
Pennsylvania. From these sessions, we are gathering critical feedback
to ensure plants do not fall behind in HACCP implementation.
FSIS recognized, based on responses and comments from the outreach/
listening sessions, the need to update its outreach strategy from one
focused on initial development of a HACCP plan, to one that is geared
towards the scientific basis of the HACCP plan. In other words, we need
to shift from ``execution'' of HACCP plans to ``design'' of those
plans. FSIS especially wants to continue to work with small and very
small plant owners and operators so they can continue to enhance the
design of their food safety systems.
Ultimately, making certain that the Nation's food supply is safe
makes good business sense, as well as good public health. We realize
plant owners and operators must have the necessary tools for success,
so education through outreach is an important focus for us. Likewise,
plant owners and operators must seek this education and these tools and
follow them. If educational or training opportunities are repeatedly
ignored then we have made it clear that public health is our
responsibility and we will take regulatory action as necessary.
Most recently, the International HACCP Alliance hosted a strategy
session attended by senior-level FSIS employees to discuss and discover
the needs business owners, especially those of small and very small
plants, have in relation to fully implementing HACCP. Both Dr. Raymond,
Under Secretary for Food Safety, and I attended the meeting to show how
important and valuable we view these sessions. The recommendations from
this session are being included as part of an implementation plan by a
group of senior-level FSIS employees. While the implementation plan is
not yet finished, I can tell you that a uniform, consistent, and
effective message regarding food safety regulations is a critical
deliverable on the part of the Agency.
Consumer Education Initiatives
In the area of consumer education this year, the Food Safety Mobile
played perhaps our most prominent role when it visited the Hurricane-
ravaged Gulf Coast region. This eye-catching ``food safety educator-on-
wheels'' brings important public health information to consumers and
builds on our partnerships in grassroots communities across the
country. Through the Food Safety Mobile, FSIS is sharing its food
safety message with the public, especially culturally diverse and
underserved populations and those with the highest risk from foodborne
illnesses. In addition to dispensing important food safety tips in
areas hit with power outages and water damage, the Food Safety Mobile
distributed food safety brochures, bleach, hand wipes, and thermal
bags. During its two-and-one half month tour of the Gulf States, the
Food Safety Mobile reached nearly 41,000 total consumers face-to-face.
In fact, the Food Safety Mobile was so successful that a second mobile
was launched in October 2005, appearing at 18 events in 11 additional
cities in Texas and Louisiana following Hurricane Rita. Food Safety
Mobile II reached an additional 15,000 consumers affected by the
hurricanes.
In another inter-agency collaborative effort to educate about the
importance of food safety, FSIS is cosponsoring with the DHHS' Food and
Drug Administration (FDA), CDC, and private sector organizations an
international food safety education conference this September, focusing
on reaching at-risk audiences. An unprecedented effort, the goals of
the conference include sharing current surveillance and epidemiological
data on foodborne illness; presenting strategies leading to enhanced
food safety knowledge, skills, and abilities in the general population
and among at-risk populations; and to communicate the latest science-
based safe food handling principles and practices.
Food Defense
The third priority is our substantial effort to continue to improve
our food defense capabilities. The Agency has accomplished much in the
area of food defense, making a strong system even stronger. The name of
the office which handles this important area was changed from the
Office of Food Security and Emergency Preparedness to the Office of
Food Defense and Emergency Response. This reflects the fact that we
have restructured the office to focus on developing strategies to
protect and defend the food supply from intentional contamination and
to respond to both intentional acts of adulteration, as well as large
scale food emergencies.
Last year, FSIS developed four model food defense plans, which are
available on our website. These models are designed to assist Federal-
and State-inspected meat, poultry, and egg products establishments, as
well as import facilities, to develop their own defense measures to
deter the threat of intentional contamination or similar attacks on the
food supply. During 2005, the Agency held workshops on these plans in
Dallas, TX; Oakland, CA; Chicago, IL; and Philadelphia, PA. In addition
to webcasting the Oakland and Philadelphia workshops, FSIS also
conducted four additional web casts to ensure that as many people as
possible had the opportunity to participate. Two of these webcasts were
targeted specifically to State officials, and the Agency also partnered
with the University of Puerto Rico in holding an entire webcast in
Spanish, which also drew participants from Latin America. In all, it is
estimated that these workshops reached over 1,200 people.
The model food defense plans have been issued in the form of
guidance documents and are voluntary. However, FSIS believes that every
establishment should have a written plan that describes and documents
controls to ensure that the premises are defended from potential
threats.
FSIS continues to assess vulnerabilities in the food supply. The
Strategic Partnership Program on Bioterrorism, a program including the
Federal Bureau of Investigation, FDA, and Department of Homeland
Security (DHS), along with FSIS and other USDA agencies, carries out
joint vulnerability assessments on the food supply with industry and
States, and we have been working in conjunction with the CDC, the FDA,
epidemiologists, and public health laboratories in several States
through the FoodNet and PulseNet programs. FSIS is also conducting an
assessment of vulnerabilities of the food supply from illegally
imported products.
The majority of the $15.8 million increase in our fiscal year 2007
food and agriculture defense budget request focuses on the Food
Emergency Response Network (FERN). FERN is a joint FSIS-FDA effort of
national, State, and local laboratories to provide ongoing surveillance
and monitoring of food and to promptly respond to an intentional
contamination that targets the Nation's food supply, or a foodborne
illness outbreak brought about by Mother Nature. To date, $4 million in
funding allocated in fiscal year 2005 and fiscal year 2006 has been
used to build on the expertise of the Federal, State, and local
laboratories that are now part of FERN, and these laboratories are
currently conducting method development for testing and performing
proficiency testing. FERN has also established five Regional
Coordination Centers that serve as the primary points of contact for
laboratories across the country.
This effort enables FSIS to utilize State and local laboratories in
handling the numerous samples required to be tested in the event of an
attack on the food supply, a natural outbreak, or even a hoax,
involving a meat, poultry, or egg product. It is vital for the Agency
to respond rapidly to such emergencies to not only protect the public's
health, but also to ensure public confidence in the safety of the food
supply and to prevent an economic collapse in the meat or poultry
industries. The first line of this rapid response is the laboratories,
which must be provided with training, methodology, and state-of-the-art
laboratory equipment. Ultimately, our goal is to have 100 State and
local laboratories actively testing the food supply for FERN, like the
18 FSIS-affiliated biological and eight FDA-affiliated chemical
laboratories with which FERN now has cooperative agreements.
Another important example of inter-agency cooperation, and one that
is designed to allow the FERN labs to test methods and proficiency, is
a joint project between USDA's Food and Nutrition Service, Agricultural
Marketing Service (AMS), and FSIS. Product samples will be taken from
facilities in four States that provide ground beef to the National
School Lunch Program. FSIS labs will test those samples for threat
agents, in addition to the regular pathogen testing that is performed
by AMS. Then, once that product has been sent to warehouses, it will
then be retested for the same threat agents by non-FSIS labs in the
FERN network that have a cooperative agreement with the FERN network.
The project will be held later this year and is the first one to focus
on FSIS-regulated products. Earlier projects held in November and
December of 2004 tested FDA-regulated products.
Risk Analysis
Fourth, is our risk analysis priority--which includes risk
assessment, risk management, and risk communication. This is an
extremely important process, one that provides FSIS with a way to focus
resources on hazards that pose the greatest risk to public health.
A good risk assessment needs good data in order to be effective.
Therefore, we are conducting a series of nationwide baseline studies
that will help determine the levels of various pathogenic
microorganisms in raw meat and poultry. These baseline studies are
designed to provide FSIS and the regulated industry with data
concerning the prevalence and quantitative levels of selected foodborne
pathogens and microorganisms that serve as indicators of process
control.
The first baseline study, which began in August and will continue
to December 2006, is for E. coli O157:H7 and indicator organisms in
beef trim and subprimals. Data from this study will guide Agency
decisions on performance standards and allocation of inspection
resources. In September of last year, a contract was awarded to a
third-party laboratory to perform the microbial analyses for future
baseline studies on: young chicken carcasses, ground chicken, and swine
carcasses. From this, a new baseline study for young chicken carcasses
will be initiated within the next few months. The young chicken
baseline will include prevalence and quantified levels for both
Salmonella and Campylobacter. This scientific information will allow
FSIS to make the decisions necessary to move to a more robust, risk-
based inspection system.
Regarding BSE, USDA has contracted with Harvard University to
update its risk assessment to ensure previous measures implemented
through the interim final rules were appropriate. USDA is drafting a
final rule based on the comments received on the interim final rule,
the results of the updated Harvard Risk Assessment and results of the
USDA enhanced surveillance program.
During the past year, FSIS assumed the Chair of the USDA Food
Safety Risk Assessment Committee (FSRAC), whose purpose is to enhance
communication and coordination among USDA agencies, to promote sound
risk assessments in support of food safety policy, and regulatory
decisions. FSIS also became the co-lead for the Interagency Risk
Assessment Consortium to share information and coordinate food safety
risk assessment approaches among 18 Federal agencies, including DHHS,
the Department of Defense, and the Environmental Protection Agency.
Management Controls and Efficiency
Our fifth priority is management controls and efficiency, which is
a priority we added as a mechanism to best achieve our operational
goals and objectives within each program area. Every task undertaken by
the Agency has an effect on public health. Because of this, we are
requiring each program area to illustrate through documentation that
they are meeting their established goals.
In order to ensure that proper management controls are implemented,
FSIS' Office of Program Evaluation, Enforcement, and Review (OPEER)
branch will audit all Agency program areas to measure the outcomes. In
fiscal year 2005, the Agency began development of a two-phase
management control audit protocol and agenda to systematically verify
and evaluate management controls. Phase 1 will verify the
implementation of the management controls for each program area; Phase
2 will verify that each program is achieving its objectives, and that
their controls are adequate and are achieving the program's desired
results.
During fiscal year 2005, we developed and implemented management
controls that established operational performance standards for
verification of HACCP requirements, ante-mortem/post-mortem
requirements, Food Safety Assessments, administrative enforcement
actions, food defense verification, and recall procedures.
FSIS launched the AssuranceNet project team in fiscal year 2006.
This team is developing a state-of-the-art management control reporting
system that will tie into key Agency databases. The AssuranceNet team
collects information on Agency management controls and the items the
Agency needs in the way of a reporting tool. The team is working with
Agency technical staff and outside contractors to develop the system
according to industry standards and best practices. The AssuranceNet
system will undergo extensive real world testing before it becomes
fully available for use in June 2006.
An area of management efficiency which we at FSIS emphasize is
human resources (HR) modernization and reform. In 2004, FSIS launched
an initiative to reshape the HR system to better support our human
capital and strategic plans and to facilitate every-day mission
performance. The resulting internal work group has developed innovative
HR practices that can be implemented under current law, as well as
identifying innovations that require Federal legislation or regulatory
changes. We stand committed to the belief that the Agency requires an
alternative HR system that emphasizes pay-for-performance.
Public Health Communications Infrastructure
Our sixth priority is the public health communications
infrastructure with the ability to collect, assess, and respond to data
in real-time. Because this is also a foundation of a more robust, risk-
based inspection system, we are constantly looking for ways to improve
communication within the Agency, between the Agency and its
stakeholders, as well as cross-Agency communications. FSIS is examining
its data needs to make our field operations more effective. Having the
same data from the border, the districts, and field and laboratory
personnel at the same time is essential so that everyone can connect
the dots and proactively respond to this wealth of information rather
than just react after a problem surfaces. Proactively interpreting our
data will better protect public health from the prospect of non-
intentional or intentional contamination. By collecting, assessing, and
responding to data in real time, lives can be saved.
A key part of this process is through the effective management of
information technology (IT). Through an Enterprise Architecture Working
Group, we have been working closely with the Office of Management and
Budget (OMB) and others involved in the Federal-government wide e-
Government efforts to develop IT systems that facilitate cross-Agency
analysis and identification of duplicative investments, gaps and
opportunities for collaboration within and across agencies.
Another way we are working to enhance cross-Agency communication in
fiscal year 2007 is to create electronic linkages with the Department
of Homeland Security's Customs and Border Protection's International
Trade Data System in order to provide FSIS with a stronger ability to
screen and verify the security of products imported into the United
States in an efficient way. FSIS is also working with its Federal
partners through the Federal Health Architecture initiative to build a
system that all Federal agencies can communicate through to better
protect imported products.
On the Agency level, FSIS is working to have electronically stored
information from all FSIS personnel integrated and available in real-
time, allowing managers and administrators to make management decisions
more efficiently as events are unfolding and with greater access to
information. This is necessary for our inspection program personnel to
do their jobs properly and effectively and to react more rapidly in a
crisis to better protect public health and save lives. An example of
this was shown in a recent test of an updated version of our Consumer
Complaint Monitoring System (CCMS). When implemented later this year,
this new version of CCMS will include improved scientific tools to
enable us to act more quickly to prevent further foodborne illness. In
one scenario, as we were testing this new version of CCMS, we were able
to find an E. coli O157:H7 outbreak 3 weeks faster than with our
present technology. FSIS is partnering with States to integrate this
system so that this real-time data could be accessed and shared by all
to help prevent outbreaks and/or limit their scope. Other aspects would
also include procuring PDA-type hardware and related software
integrating into existing Agency computer and communications equipment
for inspection program personnel. It also includes keeping up with
rapid changes in microcomputer technology.
We believe these efforts to improve upon the Agency's IT systems
will greatly enhance the Agency's efforts to support the President's
Management Agenda, and move us towards more efficient e-Government
solutions to the challenges we face.
InsideFSIS Debuts
Other ways that we have improved our communications includes
InsideFSIS, the Agency's employee intranet which was launched in June.
With InsideFSIS, employees are able to gain instant access to important
Agency information and may participate in netcasts, as was the case
with a State of the Agency meeting held in September last year. We also
have an extensive food handlers' education program that encompasses
everything from bilingual pamphlets on using thermometers to our Food
Safety Mobile.
I have already mentioned the prominent role the Food Safety Mobile
played on the hurricane-ravaged Gulf Coast, but the Food Safety Mobile
was not the only way the Agency played an important role in our
strategy to respond to the hurricanes. Prior to both hurricanes'
landfalls, FSIS issued videotaped consumer alerts with food safety tips
following a power outage or flood that were satellite broadcast to
media outlets in Alabama, Louisiana, Georgia, and Florida. In addition,
the Agency's Meat and Poultry Hotline began 24-hour service to handle
any food safety questions from consumers. Our outreach to American
consumers continued into September, when FSIS recorded and distributed
public service announcements offering food safety tips.
Fiscal Year 2007 Budget Request
I appreciate the opportunity to discuss FSIS' priorities with you.
Now, I would like to present an overview of the fiscal year 2007 budget
requests for FSIS. These budget initiatives are vital to helping us
attain FSIS' public health mission, as outlined by our priorities. In
fiscal year 2007, FSIS is requesting an appropriation of $862.9
million.
Risk-Based System
FSIS is seeking a total increase of $2.6 million for the
improvement of Agency support for risk-based inspection and risk-based
Salmonella control. We are requesting $1.9 million for Agency support
of risk-based inspection. Finally, for our risk-based Salmonella
approach, we are requesting $602,000.
Food and Agriculture Defense Initiative
The fiscal year 2007 budget also requests a total increase of $15.8
million for FSIS to support the Food and Agriculture Defense Initiative
in partnership with other USDA agencies, the DHHS, and the Department
of Homeland Security. Because food contamination and animal and plant
diseases could have catastrophic effects on human health and the
economy, the three Federal departments involved are working together on
a comprehensive food and agriculture policy that will enrich the
Government's ability to respond to the dangers of disease, pests, and
poisons, whether natural or intentionally introduced. The total is
broken down as follows:
Central to FSIS' food defense efforts is FERN, for which we are
seeking an increase of $13 million. These funds are critical to help
FSIS provide participating laboratories with the necessary training,
laboratory equipment and supplies so that we can handle surge capacity,
whether from events stemming from a hoax, intentional acts or mother
nature. From a public health standpoint, an investment in FERN is an
absolute essential priority if we want to prevent, or mitigate, the
loss of life and economic hardship if an intentional or unintentional
incident affecting the food supply were to happen.
We are also requesting $2.5 million for two data systems to support
FERN--the electronic laboratory exchange network (eLEXNET), and a
repository of analytical methods. The eLEXNET is a national, web-based,
electronic data reporting system that allows analytical laboratories to
rapidly report and exchange standardized data. This system is currently
operational in nearly 100 food-testing, public health, and veterinary
diagnostic laboratories across the country. The fiscal year 2007 budget
request would make eLEXNET available to additional FERN and other
analytical, food-testing laboratories. This will require eLEXNET system
management, travel, on-site computer programming, and training.
Access to current, properly validated methods used for screening,
confirmation, and forensic analysis is critical to all laboratories.
For this reason, FSIS is working with FDA to develop a Web-based
repository of analytical methods compatible to eLEXNET. Access to these
methods will greatly enhance the ability of FERN and other laboratories
to respond to emergencies, to use new methodologies and technologies,
to enhance efficiency, and to trouble-shoot problems. The requested
funding will be used to enhance the repository and to populate the
repository with numerous methods that will be obtained from analytical
laboratories.
Communication
In order to facilitate cross-Agency coordination of information,
FSIS seeks an increase of $600,000 for International Food Safety in
order to link to the Import Trade Data System managed by the Department
of Homeland Security's Customs and Border Protection. Currently, FSIS
relies on the importer of record to present shipments for reinspection,
and the lack of network linkages among import data systems maintained
by different agencies contributes to a prolonged, sometimes incomplete
rendering of product dispositions and document certification for
imported meat and poultry products at U.S. ports of entry.
We are also requesting funds for Agency efforts to support the
President's Management Agenda in the area of IT. As I pointed out
earlier, the Agency is seeking ways to have electronically stored
information from all FSIS personnel integrated and available in real-
time. This would allow inspectors ready access to information necessary
to protect the public health. For inspector communication enhancements,
such as the PDA-type hardware for inspectors mentioned earlier, we are
seeking $615,000.
Our experience has shown that the originally postulated life cycle
of 5 years for microcomputers delivered to the field inspection
workforce is not practical, given the rapid pace of technological
changes. To replace a 5-year lifecycle for computer hardware with a 3-
year lifecycle, the Agency seeks $1,271,000. This accounts for the
approximately 4,000 microcomputers in the field. Our goal is to replace
1,300 to 1,400 computers annually.
Personnel Pay Increase
An increase of $16 million for the FSIS inspection program is
requested to provide for the 2.2 percent pay raise for FSIS employees
in fiscal year 2007 to assure that the Agency is provided sufficient
funds to maintain programs. Failure to provide the full amount for pay
and benefit costs jeopardizes the effectiveness of FSIS programs and
weakens food safety.
User Fee Proposal
Once again this year, our budget reproposes the implementation of a
new user fee. As you know, inspection services for the cost of Federal
meat, poultry, and egg products during all approved shifts are
currently paid for with Federal funds, provided that the species or
product is covered under our legislative authority. However, most
plants run beyond one 8-hour shift per day. A fee for services beyond
that would save significant Federal costs by transferring these costs
to the industries that directly benefit from them. The proposed fiscal
year 2007 savings are projected at $105.4 million to reflect
collections of receipts for three quarters of the year.
Closing
As we mark the 100th anniversary of the passage of the FMIA, FSIS
will continue to engage the scientific community, public health
experts, and all interested parties in an effort to identify science-
based solutions to public health issues to ensure positive public
health outcomes. It is our intention to pursue such a course of action
this year, as we have in the past, in as transparent and inclusive a
manner as possible. The strategies I discussed today will help FSIS
continue to pursue its goals and achieve its mission of reducing
foodborne illness, and protecting public health through food safety and
defense.
Mr. Chairman, thank you again for providing me with the opportunity
to speak with the Subcommittee and submit testimony regarding the steps
that FSIS is taking to remain a world leader in public health. I look
forward to working with you to improve our food safety system and
ensuring that we continue to have the safest food in the world.
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
Senator Bennett. Thank you. Dr. Lambert.
STATEMENT OF CHARLES LAMBERT
Mr. Lambert. Thank you, Chairman Bennett, Senator Kohl.
I am pleased to appear before you to discuss the activities
of the Marketing and Regulatory Programs and to present our
2007 budget proposals.
With me today are Dr. Ron DeHaven, who is the Administrator
of the Animal and Plant Health Inspection Service (APHIS); Mr.
Lloyd Day, Administrator of the Agricultural Marketing Service
(AMS); and Mr. James Link, who is the Administrator of the
Grain Inspection, Packers and Stockyards Administration
(GIPSA). And those are the three agencies that make up
Marketing and Regulatory Programs (MRP).
In addition, Mr. Dennis Kaplan from the department's Budget
Office is here with us.
MRP has addressed several broad goals and objectives to
increase marketing opportunities and to protect American
agriculture from damages caused by pests and diseases, both
intentional and unintentional. The key to private sector
financial success is relatively simple. First, offer high-
quality products. Second, produce them at a competitive cost.
And third, earn a fair price in the marketplace.
In relation to this, MRP has identified three areas for
special attention to make American agriculture more
competitive. They include protecting plant and animal health;
ensuring quality; and continuing to work with the Department of
Homeland Security to exclude agricultural health threats and
with farmers and ranchers to control endemic pests and diseases
once they are here.
Through MRP's commodity grading and inspection programs, we
support producers in the marketing of high-quality crops and
livestock.
Second is through enhancing market access by reducing
technical barriers to trade. And third is harmonizing
international standards by redoubling our efforts in a variety
of international standard-setting organizations and working
closely with our sister agencies to ensure that technical
standards do not become technical barriers.
MRP activities are funded both by the taxpayers and
beneficiaries of program services. The budget proposes that the
MRP agencies carry out programs of close to $2 billion, with
$412 million funded by fees charged to direct beneficiaries and
$450 million from customs receipts.
On the appropriation side, the President's budget requests
about $959 million for APHIS, $85 million for AMS, and $42
million for GIPSA.
The budget proposes user fees that, if enacted, would
generate about $42 million in savings to the U.S. taxpayer. The
budget also includes a proposal to terminate the AMS
Microbiological Data Program, given its limited use to
determine the source of food-borne illnesses and other reasons.
PREPARED STATEMENTS
Mr. Chairman, the increases that you referred to are
generally in the exclusion of foreign animal and plant diseases
and pests and for enhanced monitoring and surveillance
primarily related to avian influenza.
I look forward to working with the committee on the 2007
budget for marketing and regulatory programs. We believe the
proposed funding amounts and sources of funding are vital to
improving plant and animal health and ensuring quality and
enhancing market access and achieving harmonization of
international standards. It also works to reduce the deficit
and protects American agriculture from terrorists.
We are happy to answer any questions. Thank you.
[The statements follow:]
Prepared Statement of Charles Lambert
Mr. Chairman and members of the Committee, I am pleased to appear
before you to discuss the activities of the Marketing and Regulatory
Programs (MRP) of the U.S. Department of Agriculture and to present our
fiscal year 2007 budget proposals for the Animal and Plant Health
Inspection Service (APHIS), the Agricultural Marketing Service (AMS),
and the Grain Inspection, Packers and Stockyards Administration
(GIPSA).
With me today are Mr. Jeremy Stump, Acting Deputy Under Secretary
for MRP; Dr. Ron DeHaven, Administrator of APHIS; Mr. Lloyd Day,
Administrator of AMS; and Mr. James Link, Administrator of GIPSA. They
have statements for the record and will answer questions regarding
specific budget proposals.
MRP has addressed several broad goals and objectives to increase
marketing opportunities and to protect American agriculture from
damages caused by pests and diseases, both intentional and
unintentional. The key to private sector financial success is
relatively simple. First, offer the highest quality products. Second,
produce them at the lowest possible cost. And, third, earn a fair price
in the marketplace.
MRP helps American farmers and ranchers in several ways. AMS and
GIPSA certify the quality of agricultural commodities and provide
industry with a competitive edge earned by the USDA seal of approval
for grading and inspection. APHIS protects the health of plants and
animals, thereby keeping costs low. APHIS also provides plant and
animal sanitary and phytosanitary (SPS) expertise during international
negotiations to maintain and open markets around the world, and GIPSA
works to ensure that livestock producers have a level playing field
upon which to compete. A healthy and marketable product provides the
foundation of competitive success.
MRP INITIATIVES
MRP has identified three areas for special attention to make
American agriculture more competitive. They include:
Protect Plant and Animal Health and Ensure Quality.--MRP will
continue to work closely with the Department of Homeland Security (DHS)
to prevent the entry of foreign plant and animal pests and diseases
through the Agricultural Quarantine Inspection Program (AQI). We will
continue to work with farmers and ranchers to control endemic pests and
diseases at minimal levels. Through MRP's commodity grading and
inspection programs, we will support our producers in the marketing of
their high quality crops and livestock.
Enhance Market Access.--Market access can be impaired through
technical barriers and SPS measures. MRP will continue to work closely
with international counterparts to educate them about our systems; to
learn more about the foreign country requirements; and to certify that
U.S. products meet their standards.
Harmonize International Standards.--MRP will continue to provide
expertise in an effort to harmonize sanitary and phytosanitary
measures. Since risk is inherent and fair trade relies upon the same
standards being applied to all parties, MRP will increase its efforts
with the World Organization for Animal Health and the International
Plant Protection Convention to develop standards and processes for two-
way trade to exist, with restrictions and mitigations based on science
to reduce risk. Moving away from an ``all or nothing'' approach makes
trade therefore less risky, as a localized or contained outbreak has
fewer effects on exports and thus on the economy. In a similar vein, a
level playing field in world markets depends on technical standards
that describe the quality and other characteristics of agricultural
products in a manner that does not discriminate against U.S. producers
and shippers. MRP will redouble its efforts in a variety of
international standard setting organizations and work closely with our
sister agencies to ensure that technical standards do not become
technical barriers.
FUNDING SOURCES
The MRP activities are funded by both the taxpayers and
beneficiaries of program services. The budget proposes that the MRP
agencies carry out programs of close to $2 billion, with $412 million
funded by fees charged to the direct beneficiaries of MRP services and
$450 million from Customs receipts.
On the appropriation side, the Animal and Plant Health Inspection
Service is requesting about $953 million for salaries and expenses and
$6 million for repair and maintenance of buildings and facilities; the
Agricultural Marketing Service is requesting $85 million; and the Grain
Inspection, Packers and Stockyards Administration is requesting $42
million.
The budget proposes user fees that, if enacted, would generate
about $42 million in savings to the U.S. taxpayer. Legislation will be
proposed to provide USDA the authority to recover the cost of
administering the Packers and Stockyards Act, developing grain and
other commodity standards that are used to support fee-based grading
programs and for other purposes, providing Federal oversight of
marketing agreements and orders, and inspecting entities regulated
under the Animal Welfare Act. I will use the remainder of my time to
highlight the major activities and our budget requests for the
Marketing and Regulatory Programs.
ANIMAL AND PLANT HEALTH INSPECTION SERVICE
The fundamental mission of APHIS is to anticipate and respond to
issues involving animal and plant health, conflicts with wildlife,
environmental stewardship, and animal well-being. Together with their
customers and stakeholders, APHIS promotes the health of animal and
plant resources to enhance market access in the global marketplace and
to ensure abundant agricultural products and services for U.S.
customers. I would like to highlight some key aspects of the APHIS
programs:
Improve Plant and Animal Health.--While APHIS continues to work
closely with the Department of Homeland Security (DHS) to exclude
agricultural health threats, it retains responsibility for promulgating
regulations related to entry of passengers and commodities into the
United States. APHIS' efforts have helped keep agricultural health
threats away from U.S. borders through increased offshore threat-
assessment and risk-reduction activities. APHIS has also increased an
already vigilant animal and plant health monitoring and surveillance
system to promptly detect outbreaks of foreign and endemic plant and
animal pests and diseases.
Since June, 2004, when we launched the one-time, significantly
enhanced surveillance program for BSE, we have tested about 660,000
high-risk animals as of March 20, 2006, and an additional 21,000
clinically-normal animals. Only two samples have tested positive. APHIS
is in the process of evaluating the enhanced program, though it
certainly would not be premature to say that by any measure the
incidence of BSE in the United States is extremely low.
In addition, we are moving ahead with the National Animal
Identification System (NAIS). All 50 States, five Tribes, and two U.S.
Territories are registering premises with an estimated total of about
213,000 premises registered as of March 7, 2006. APHIS and its State
and Tribal cooperators are registering hundreds of premises each week,
and we are also in the preparation stage to begin allocation of
individual animal identification numbers.
We have been closely monitoring the very alarming spread of highly
pathogenic avian influenza overseas. USDA is a full partner in the
government-wide effort to prepare the country for a potential pandemic
and the worldwide effort to stop the spread of H5N1 virus at its source
overseas. We appreciate funding provided through the December, 2005,
pandemic influenza emergency supplemental. We are using those funds for
international efforts, domestic surveillance of poultry and migratory
birds, diagnostics, and emergency preparedness and response.
Because efforts to exclude foreign pests and diseases are not 100
percent successful, APHIS also assists stakeholders in managing new and
existing agricultural health threats, ranging from threats to
aquaculture, crops, tree resources, livestock and poultry. In addition,
APHIS assists stakeholders on issues related to conflicts with wildlife
and animal welfare.
Enhance Market Access.--The Trade Issues Resolution and Management
efforts are key to ensuring fair trade of all agricultural products.
APHIS' staff negotiates SPS standards, resolves issues, and provides
clarity on regulating imports and certifying exports which improves the
infrastructure for a smoothly functioning market in international
trade. Ensuring that the rules of trade are based on science helps open
markets that have been closed by unsubstantiated SPS concerns.
In fiscal year 2005, reopening markets for United States products
posed one of the greatest challenges. In regard to beef markets that
were closed to U.S. exports because of BSE, APHIS has contributed to
regaining at least partial access to 26 markets. Altogether, APHIS
resolved 79 SPS issues in fiscal year 2005, allowing approximately $1.4
billion worth of trade to occur.
Recent developments in biotechnology underscore the need for
effective regulation to ensure protection of the environment and food
supply, reduce market uncertainties, and encourage development of a
technology that holds great promise. APHIS' Biotechnology Regulatory
Services unit coordinates our services and activities in this area and
focuses on both plant-based biotechnology and transgenic arthropods. We
also are examining issues related to transgenic animals.
APHIS' 2007 BUDGET REQUEST
In a year of many pressing high-priority items for taxpayer
dollars, the budget request proposes about $953 million for salaries
and expenses. There are substantial increases to support the
Administration's Food and Agriculture Defense Initiative, enhance avian
influenza efforts, address SPS trade barriers, and deal with specific
threats to the agriculture sector. In addition, existing user fees of
about $139 million will support Agricultural Quarantine Inspection and
related activities. A brief description of key efforts supported by the
2007 budget request follows.
A Total of About $182 Million for Foreign Pest and Disease
Exclusion.--Efforts will focus on enhancing our ability to exclude
Mediterranean fruit fly, foreign animal diseases, and screwworm. In
addition, we also request funds to open offices in Thailand, India,
Italy, and West Africa to facilitate U.S. exports.
A Total of About $304 Million for Plant and Animal Health
Monitoring and Surveillance.--Due to the critical role of APHIS in
protecting the Nation from both deliberate and unintentional
introductions of an agricultural health threat, the budget requests an
increase of about $62 million as part of the Food and Agriculture
Defense Initiative. This request would provide: enhanced international
information gathering about potential threats abroad; greater plant
pest detection and safeguarding; increased national wildlife and animal
health surveillance; improved ability to respond to plant or animal
disease outbreaks; and vaccines and supplies for the National
Veterinary Stockpile. We will also continue efforts to build the
National Animal Identification System to limit the spread of a
potential animal disease outbreak.
A new request is intended to stop, slow, or otherwise limit the
spread of highly pathogenic avian influenza to the United States and to
limit the domestic spread of a pandemic. The budget includes an
additional $57 million for international capacity building (e.g.,
providing in-country veterinary expertise overseas); domestic
surveillance and diagnostics (including wildlife surveillance); and
emergency preparedness and response. This would continue efforts that
were started with funds from the December, 2005, pandemic influenza
emergency supplemental.
A Total of $344 Million for Pest and Disease Management Programs.--
Once a pest or disease is detected, prompt eradication will reduce
long-term damages. In cases where eradication is not feasible (e.g.,
European gypsy moth), attempts are made to slow the advance, and
damages, of the pest or disease. APHIS provides technical and financial
support to help control or eradicate a variety of agricultural threats.
The budget proposes a number of increases, including those for citrus
canker, emerald ash borer, and sudden oak death. Other programs are
reduced. For example, successes in boll weevil eradication efforts
allow a reduction in that program. Included is an increase of $10
million for competitive grants to fund the application of innovative
private-sector solutions to real-world pest and disease problems.
A Total of $20 Million for the Animal Care Programs.--Additional
funding will help APHIS maintain its animal welfare and horse
protection programs despite the rapid growth in the number of new
licensees and registrants. The budget includes a proposal to collect $8
million in fees from regulated entities to help cover costs associated
with inspections under the Animal Welfare Act.
A Total of $94 Million for Scientific and Technical Services.--
Within USDA, APHIS has chief regulatory oversight of genetically
modified organisms. To help meet the needs of this rapidly evolving
sector, the budget includes a request to, in part, enhance our
regulatory role towards transgenic animals and disease agents. Also,
APHIS develops methods and provides diagnostic support to prevent,
detect, control, and eradicate agricultural health threats, and to
reduce wildlife damages (e.g., coyote predation). It also works to
prevent ineffective or harmful animal biologics from being marketed.
A Total of $10 Million for Improving Security and IT Operations.--A
portion of the increase would be used to upgrade key computer resources
for eGov requirements and other efforts. It also includes providing the
State Department funds to help cover higher security costs for APHIS
personnel abroad.
AGRICULTURAL MARKETING SERVICE
The mission of the AMS is focused on facilitating the marketing of
agricultural products in the domestic and international marketplace,
ensuring fair trading practices, and promoting a competitive and
efficient marketplace to the benefit of producers, traders, and
consumers of U.S. food and fiber products. The Agency accomplishes this
mission through a wide variety of publicly and user funded activities
that help its customers improve the marketing of their food and fiber
products and ensure such products remain available and affordable to
consumers. Consequently, most AMS programs enhance access to current
trading information, including availabilities of supply, location and
size of demand, underutilized market facilities, and availability of
means of transportation. In addition, the Standardization program
contributes to the harmonization of international quality standards.
Market News.--Market news reports improve market efficiency for all
parties by offering equal and ready access to current, unbiased market
information so that agricultural producers and traders can determine
the best place, price, and time to buy or sell. AMS Market News
provides this information by reporting current prices, volume, quality,
condition, and other market data on farm products in more than 1,300
production areas and specific domestic and international markets. In
October 2005, AMS launched a new Market News Web Portal, making Fruit
and Vegetable and Livestock and Grain reports immediately available for
users, with other AMS commodities to be added in coming months.
The Livestock Mandatory Price Reporting Program continues to
provide more than 100 daily, weekly, or monthly reports on fed cattle,
swine, lamb, beef, and lamb meat market transactions. However, since
legislative authority for the Program lapsed on September 30, 2005, the
program operates on a voluntary basis. The Government Accountability
Office recently reviewed the program and we are making improvements in
response to their recommendations.
Commodity Standards.--AMS works with the agricultural industry to
establish and improve commonly recognized quality descriptions for
agricultural commodities that support access to domestic and
international markets. The Standardization program supports exports of
U.S. agricultural products by helping to represent the interests of
U.S. producers in a variety of international standards development
meetings. AMS experts continue to participate in developing
international dairy, meat, poultry, fruit, and vegetable standards.
Country of Origin Labeling.--AMS is implementing a Country of
Origin Labeling surveillance and enforcement program for fish and
shellfish. Labeling requirements for these products became mandatory on
April 4, 2005, and AMS has educated the industry on the documentation
and records required to substantiate country of origin and method of
production claims.
National Organic Program.--The National Organic Standards program
supports market access for organic producers by setting national
standards for organic products sold in the United States, which
provides assurance for consumers that the organic products labeled
``organic'' uniformly meet those requirements. The U.S. organic food
industry has increased to an $18 billion annual sales level and is
still growing.
Pesticide Data and Microbiological Data Programs.--AMS also
provides consumer assurance by collecting pesticide residue data and
microbiological baseline data. In 2005, the Pesticide Data program
performed over 120,000 analyses on more than 13,000 samples. The data
gathered and reported by AMS on pesticide residues supports science-
based risk assessments performed by a number of entities, including
regulatory agencies.
Transportation Services.--The Transportation Services program
supports market access by facilitating the movement of U.S. agriculture
products from farm to market. This program helps maintain farm income,
expand exports, and sustain the flow of food to consumers by providing
``how to'' technical expertise, research, and data on domestic and
international transportation to growers, producers, and others in the
marketing chain, and for government policy decisions. The
Transportation Services program also produces periodic publications
that improve market access by providing information for agricultural
producers and shippers on trends, availability, and rates for various
modes of transportation, including grain and refrigerated transport,
agricultural containers, and ocean shipping. In fiscal year 2005, the
program greatly expanded its reporting to keep the Secretary and
Administration officials well-apprised on the impacts of Hurricanes
Katrina and Rita on agricultural transportation.
Wholesale, Farmers, and Alternative Markets.--AMS program experts,
in cooperation with local and city agencies, improve market access to
market facilities by assisting local efforts to develop or improve
wholesale and farmers markets, and to discover other direct marketing
opportunities. This program also supports research projects to help
agricultural producers discover new or alternative marketing channels
and new technology. For 2006, AMS was appropriated funds to implement
the Farmers Market Promotion program. The program will make grants of
up to $75,000 to eligible entities, such as agricultural cooperatives,
local governments, and others, to establish, expand, and promote
farmers' markets and other direct-to-consumer marketing channels.
Federal/State Marketing Improvement Program (FSMIP).--AMS helps to
resolve local and regional agricultural market access problems by
awarding Federal matching grants for projects proposed by State
agencies. In 2005, the FSMIP program allocated grant funds to 21 States
and Puerto Rico for 27 projects such as studies on linking producers
with new buyer groups and innovative uses for locally important
agricultural products.
Commodity Purchases.--USDA nutrition programs provide growers and
producers with access to an alternative outlet for their commodities.
AMS food purchases stabilize markets and support nutrition programs,
such as the National School Lunch Program, the Emergency Food
Assistance Program, the Commodity Supplemental Food Program, and the
Food Distribution Program on Indian Reservations. AMS works in close
cooperation with both the Food and Nutrition Service (FNS) and the Farm
Services Agency (FSA) to administer USDA commodity purchases and to
maximize the efficiency of food purchase and distribution operations.
In fiscal year 2006, we will begin the development of a Web-based
Supply Chain Management System, which will enhance our ability to track
bids, orders, purchases, payments, inventories, and deliveries of
approximately $2.5 billion of commodities used in all food assistance
programs every year in addition to those price-support commodity
products maintained in inventory.
AMS' 2007 BUDGET REQUEST
For 2007, the AMS budget proposes a program level of $730 million,
of which $195 million (nearly 27 percent) will be funded by existing
user fees, $450 million (approximately 62 percent) by Section 32 funds
and $85 million (about 12 percent) by appropriations, which includes
$14.5 million to be derived from proposed new user fees. More
specifically, the budget includes the following:
An Increase of About $1 Million for the National Organic Program.--
This request is to ensure that the National Organic Program can meet
the needs of the rapidly growing organic industry. The increase will
support: rulemaking needed to address a court order that found three
elements of the national organic standards regulations inconsistent
with statutory authority; renewal of substances on the National List of
Approved and Prohibited Substances that are set to expire on October
21, 2007; and increased compliance actions, including training sessions
for certifying agents.
An Increase of About $400,000 for the Federal Seed Act Program.--
AMS would assume seed testing in those States that have withdrawn from
the program and work with seed producers and States to improve the
accuracy of seed sampling and testing programs.
An Increase of About $2.8 Million for a Food Protection Program.--
AMS would promote the protection of commodities provided to the
National School Lunch Program (NSLP) and other Federal nutrition
assistance programs by incorporating food security attributes into
purchase specifications, conducting vulnerability assessments needed to
develop industry guidance on how to protect products purchased for
distribution through NSLP, and development of model food security plans
for products of importance to NSLP.
Funding of More than $1 Million for Payments to States.--Under the
Federal-State Marketing Improvement Program, AMS awards Federal
matching grant funds to State agencies to address local and regional
agricultural marketing problems.
Funding of Nearly $10 Million Within Marketing Services for the
Web-based Supply Chain Management System.--As mentioned earlier, this
system, the successor to the Processed Commodities Inventory Management
System, will improve information technology systems used to manage and
control commodity orders, purchases, and delivery. Discretionary
appropriated funding is requested in fiscal year 2007 to continue
developing the system.
As Secretary Johanns testified before this committee last month,
the 2007 budget funds our most important priorities while exercising
fiscal discipline that is necessary to reduce the Federal deficit. The
AMS budget has proposals that moves us in the right direction while
continuing to meet key priorities.
A Decrease of About $6.3 Million for the Termination of the
Microbiological Data Program (MDP).--The fiscal year 2007 budget does
not request funding to continue the MDP because it is difficult to
determine to what extent the data is used to support risk assessments.
Sample origin data is not collected which limits the use of the data in
epidemiological investigations aimed at determining the source of
outbreaks of foodborne illness. In response to these findings and the
need to limit Federal spending, the program is proposed for termination
in 2007.
User Fees.--The budget proposes to collect about $2 million through
user fees for the development of domestic commodity grade standards
that are associated with a grading program. Users of grading services
are direct beneficiaries of commodity standards and, therefore, should
be charged for the development of commodity grades associated with the
grading and inspection program. In order to implement this proposal,
legislation will be submitted to Congress to authorize these fees.
Likewise, approximately $12 million in user fees would be collected for
Federal administration of marketing agreements and orders, which is
currently funded through Section 32. The local market administrator or
committee will be billed for their portion of Federal administrative
costs.
GRAIN INSPECTION, PACKERS AND STOCKYARDS ADMINISTRATION
GIPSA's mission is to enhance market access for livestock, meat,
poultry, cereals, oilseeds, and related agricultural products and to
promote fair and competitive trade for the benefit of consumers and
American agriculture. GIPSA fulfills this through both service and
regulatory functions in two programs: the Packers and Stockyards
Programs (P&SP) and the Federal Grain Inspection Service (FGIS).
Before proceeding, I want to note that we are taking very seriously
the recent audit by the Office of Inspector General (OIG) of the P&SP
and we have established an aggressive schedule to improve enforcement
of the Packers and Stockyards Act. The audit identified areas where
program management was not up to the high standard that this
Administration expects and our stakeholders deserve. The OIG provided
ten recommendations for strengthening the P&SP. GIPSA concurs with all
recommendations and is taking aggressive action to implement them.
Packers and Stockyards Programs.--Recognizing what needs to be
improved, the strategic goal for P&SP is to promote a fair, open and
competitive marketing environment for the livestock, meat, and poultry
industries. Currently, with 152 employees, P&SP monitors the livestock,
meatpacking, and poultry industries, estimated by the Department of
Commerce to have an annual wholesale value of about $120 billion. Legal
specialists and economic, financial, marketing, and weighing experts
work together to monitor emerging technology, evolving industry and
market structural changes, and other issues affecting the livestock,
meatpacking, and poultry industries that the Agency regulates.
The Swine Contract Library began operation on December 3, 2003, and
continues, though since October, 2005, it has been on a voluntary basis
since the legislative authority in the Livestock Mandatory Price
Reporting Act lapsed. Producers can see contract terms, including, but
not limited to, the base price determination formula and the schedules
of premiums or discounts, and packers' expected annual contract
purchases by region.
Progress continues to be made on the Livestock and Meat Marketing
Study, which examines broad issues surrounding packer ownership of
livestock. The contractor for the study, the Research Triangle
Institute (RTI), released an interim report in August, 2005. The final
report is scheduled for release in early 2007. We recognize that this
is later than expected, but given the complexity of issues, more time
is needed to adequately analyze them.
Federal Grain Inspection Service.--FGIS facilitates the marketing
of U.S. grain and related commodities under the authority of the U.S.
Grain Standards Act and the Agricultural Marketing Act of 1946. As an
impartial, third-party in the market, we advance the orderly and
efficient marketing and effective distribution of U.S. grain and other
assigned commodities from the Nation's farms to domestic and
international buyers. We are part of the infrastructure that undergirds
the agricultural sector.
GIPSA works with government and scientific organizations to
establish internationally recognized methods and performance criteria
and standards to reduce the uncertainty associated with testing for the
presence of biotechnology traits in grains and oil seeds. It also
provides technical assistance to exporters, importers and end users of
U.S. grains and oilseeds, as well as other USDA agencies, industry
organizations, and other governments. These efforts help facilitate the
sale of U.S. products in international markets.
Our efforts to improve and streamline our programs and services are
paying off for our customers, both in terms of their bottom lines and
in greater customer satisfaction. In fiscal year 2005, GIPSA employees
issued nearly 3 million certificates representing approximately 245
million tons of grain. One indicator of the success of our outreach and
educational initiatives is the number of foreign complaints lodged with
FGIS regarding the quality or quantity of U.S. grain exports. In fiscal
year 2005, FGIS received only ten complaints regarding poor quality and
one complaint regarding inadequate weights from importers on grains
inspected under the U.S. Grain Standards Act. These involved 456,069
metric tons, or about 0.4 percent by weight, of the total amount of
grain exported during the year.
I would like to acknowledge the efforts of GIPSA employees in the
aftermath of Hurricanes Katrina and Rita. We are proud to report that
no service requests were denied as a result of the hurricanes. GIPSA
personnel were on duty and ready to provide service as soon as the
industry resumed operations. Our local personnel showed fortitude and
determination in addressing both the personal and work-related
challenges created by the storms.
GIPSA'S 2007 BUDGET REQUEST
For 2007, the budget proposes a program level for salaries and
expenses of about $84 million, of which more than $42 million is from
existing inspection and weighing user fees. Of the appropriations
request of almost $42 million, approximately $20 million is devoted to
the grain inspection activities including standardization, compliance,
and methods development activities and about $21 million to the P&SP.
The 2007 budget includes the following program increases:
About $2.9 Million for IT Initiatives.--This would continue the
agency's multi-year IT modernization efforts, of which $1.4 million is
one-time funding. The agency's eGov initiatives would facilitate the
electronic transfer of information to and from stakeholders, and allow
more efficient utilization by GIPSA of information such as program
reviews and evaluations, agricultural product standards, inspection
data, field test equipment reporting.
About $400,000 to facilitate U.S. grain exports to Asia. GIPSA
would establish an ongoing presence in Asia to expand upon our
successful international services and trade activities currently
provided on a temporary basis.
User fees. Two user fees are included in the budget. One would be
charged to recover the costs of developing, reviewing, and maintaining
official U.S. grain standards used by the grain industry. This fee
proposal would enable GIPSA to recover almost $4 million in fiscal year
2007. Also, a further $16 million in license fees would be collected
for the Packers and Stockyards program.
CONCLUSION
This concludes my statement. I am looking forward to working with
the Committee on the 2007 budget for the Marketing and Regulatory
Programs. We believe the proposed funding amounts and sources of
funding are vital to improving plant and animal health and ensuring
quality, enhancing market access, and achieving harmonization of
international standards. It also reduces the deficit and protects
American agriculture from terrorists. We are happy to answer any
questions.
______
Prepared Statement of Lloyd C. Day, Administrator, Agricultural
Marketing Service
Mr. Chairman and Members of the Committee, I am pleased to have
this opportunity to represent the Agricultural Marketing Service (AMS)
in presenting our fiscal year 2007 budget proposal. Although I have
worked with AMS only since early August, I understand the importance of
efficient and effective marketing systems for U.S. agricultural
producers and consumers. My previous Government experience was focused
on international trade issues at the Foreign Agricultural Service and
the California Trade and Commerce Agency; in private industry, I have
managed business development and marketing activities.
To provide a starting point for discussion of our budget proposals,
I would like to begin by reviewing our agency's mission in the context
of USDA's strategic objectives. I will also discuss a few of the
programs through which we carry out that mission, and mention a few
recent accomplishments and issues of interest to AMS clientele.
MISSION
AMS is a key component in USDA's strategic objective to increase
the efficiency of domestic agricultural production and marketing
systems. This objective recognizes that the long-term viability of
agricultural producers depends on their ability to manage an efficient
and profitable operation. Once produced, agricultural goods need
efficient and equitable market outlets. AMS plays an integral role in
the U.S. marketing system by ensuring that buyers and sellers in the
food production and distribution chain have equal access to market
information and technical services. Although our focus is generally on
domestic marketing, some of our programs also support USDA's efforts to
assist U.S. agricultural producers in international marketing.
The mission of AMS is to facilitate the marketing of agricultural
products in the domestic and international marketplace, ensure fair
trading practices, and promote a competitive and efficient marketplace
to the benefit of producers, traders, and consumers of U.S. food and
fiber products. We accomplish our mission through a wide variety of
appropriated activities and through our user-funded grading,
certification, and Perishable Agricultural Commodities Act programs.
Although our user-funded and reimbursed programs are important to
agricultural marketing, most of my discussion today will focus on our
appropriated programs.
AMS PROGRAMS
AMS programs work together, in cooperation and coordination with
other Federal agencies within USDA and outside the Department, and with
State partners to provide services that support our mission. Our
``clients'' span the marketing chain from the producer to the consumer.
For example, we collect and disseminate current market information on
agricultural prices, quality, supply, demand, and other data useful for
production, sales, and purchase decisions. We also publish current
rates and availability information on agricultural product
transportation modes. We provide technical advice and support on market
facilities, methods, and technology, plus matching grants for regional
projects that support agricultural marketing. We offer independent,
official verification services to provide assurance for sellers and
buyers that commodities meet contract specifications, quality and
marketing claims, labeling, and Federal requirements, and to ensure
fair trading of agricultural production in the United States. Consumers
benefit directly from organic labeling, graded foods, farmers markets,
and pesticide residue information. Our programs assist commodity
producer groups by providing technical and regulatory support for
federally-authorized self-help programs, and we purchase food
commodities that are in short-term oversupply for use in USDA nutrition
assistance programs.
MARKETING SERVICES
Our Marketing Services programs provide services that benefit all
agricultural producers, traders, and consumers of dairy products,
fruits, vegetables, specialty crops, livestock and meat, poultry,
cotton, and tobacco. These programs facilitate marketing by providing
information, technical expertise, and buyer assurance. They are funded
through annual appropriations and include our Market News,
Standardization, Shell Egg Surveillance, Federal Seed, National
Organic, Pesticide Recordkeeping, Country of Origin Labeling, Pesticide
Data, Transportation Services, and Wholesale, Farmers, and Alternative
Market Development programs.
MARKET NEWS
AMS' Market News service reports market data on farm products in
more than 1,300 production areas and many domestic and international
markets. Market News reports for over 700 commodities are disseminated
within hours of collection via the Internet and other electronic means
and through the news media. In October 2005, we made available a new
Market News Web Portal to the public, making Fruit and Vegetable and
Livestock and Grain reports immediately available for users, with other
AMS commodities to be added in coming months. The portal allows the
agricultural industry and other interested users to customize the data
they receive, build their own reports, and query the database back to
1998. We have already received an enthusiastic response to the expanded
availability of data through the portal.
Market news data is provided by buyers and sellers for most
commodities on a voluntary basis. However, Congress established
Livestock Mandatory Price Reporting (LMPR) in 2000 to ensure that
information on meat and livestock trades would continue to be available
for producers in a consolidating industry, including formula and
contract market information. LMPR generates more than 100 daily,
weekly, or monthly reports on fed cattle, swine, lamb, beef, and lamb
meat market transactions. Legislative authority for LMPR lapsed on
September 30, 2005, following a 1-year extension. As both Houses of
Congress were considering bills to continue the program, AMS sent
letters to all packers previously required to report, requesting
voluntary cooperation in continuing to submit information required
under the mandatory program. Consequently, most of the reports continue
to be published--only the imported boxed lamb cuts and slaughter cow
reports have been discontinued.
The Government Accountability Office recently reviewed the program
and recommended some improvements. To improve reporting transparency,
AMS will inform Market News readers about the general guidelines
followed by AMS reporters in making reporting decisions through
periodic public reports on the volume of submitted transactions that
are excluded by reporters and the effect that such exclusions had on
net price distributions on all reported commodities. We also have
established a toll-free telephone information line for questions about
reporting which gives producers an opportunity to obtain information on
how the data for the livestock they sold is used in reporting.
To help verify the overall accuracy of the transaction data
supplied by packers and to identify recurring significant problems, AMS
will implement additional or modified auditing methods to increase the
overall effectiveness of compliance activities. The program is
reviewing sample selection, the need for more audits at plants that
demonstrate a higher frequency of non-compliances, and additional
analyses to identify any widespread reporting problems. To ensure
timely and consistent follow-up to audit findings, AMS has developed
new procedures that greatly improve the audit process, including
timeframes for corrective action and a hierarchy for categorizing the
severity of non-compliances. AMS also has modified its audit process to
more closely review transactions reported at the low-price end of the
market. All of these improvements will be completed by the end of this
fiscal year.
Livestock and meat information is used as a basis for developing
contracts between producers and packers, as well as packers and
retailers. We believe that the program has resulted in the availability
of comprehensive information that has improved the transparency of the
marketplace. Therefore, we request continued funding and support
reauthorization of Livestock Mandatory Price Reporting.
COUNTRY OF ORIGIN LABELING
This year, we are implementing a Country of Origin Labeling (COOL)
surveillance and enforcement program for fish and shellfish. Labeling
requirements for these products became mandatory on April 4, 2005, and
we have used the intervening months to educate the industry--suppliers
and retailers--on the documentation and records required to
substantiate country of origin and method of production claims.
Mandatory labeling requirements for all other covered commodities were
delayed until September 30, 2008. The delay will allow us to develop an
operational infrastructure before mandatory labeling for all other
commodities covered by the Act--beef, lamb, pork, perishable
agricultural products, and peanuts--becomes effective.
TRANSPORTATION
Our Transportation Services program facilitates the movement of
U.S. agricultural products to market. As part of that effort, the
program produces periodic publications that provide information for
agricultural producers and shippers on various modes of transportation,
including grain transportation, refrigerated transport, ocean rates and
transportation trends, and agricultural containers. In 2005, the
program greatly expanded its reporting to keep the Secretary and
Administration officials well-apprised of the impacts of Hurricanes
Katrina and Rita on agricultural transportation; issuing 22 daily and 5
weekly briefing reports from August 29, 2005 to October 26, 2005. In
early November, the program switched to issuing a Weekly Transportation
Update, which continued to provide information on the recovery status
of the transportation systems. During the aftermath of the hurricanes
AMS participated with the Army Corps of Engineers in briefing staff
from both houses of Congress and supported Departmental testimony on
the recovery.
MARKET DEVELOPMENT
Our Wholesale, Farmers, and Alternative Market Development program
experts, in cooperation with local and city agencies, assist local
efforts to develop or improve wholesale and farmers market facilities,
and to discover other direct marketing opportunities. This program also
supports research projects on marketing channels and market technology
improvements, as well as numerous marketing conferences and workshops
across the country. For 2006, AMS was appropriated funding to implement
the Farmers Market Promotion program. The program will make grants of
up to $75,000 to eligible entities to establish, expand, and promote
farmers' markets and other direct-to-consumer marketing channels. These
eligible entities include agricultural cooperatives, local governments,
regional farmers' market authorities, and nonprofit, public benefit,
and economic development corporations.
SECTION 32
AMS also receives appropriated funding for activities authorized
under Section 32 of the Act of August 24, 1935. AMS' Commodity Purchase
program buys perishable non-price supported agricultural commodities--
meat, poultry, fruits, vegetables, and fish to encourage domestic
consumption. Commodity purchases support the market for these
agricultural commodities by reducing supplies in temporary surplus, by
providing foods used by domestic nutrition assistance programs, and by
purchasing commodities for use in disaster relief efforts. The
purchased foods are donated to the National School Lunch Program and
other domestic nutrition programs. In fiscal year 2005, AMS purchased
1.46 billion pounds of commodities that were distributed by the Food
and Nutrition Service through its nutrition assistance programs. As
directed by the Secretary, this program may also make emergency
diversion and relief payments to producers in temporary distress. In
addition to commodity purchasing activities, Section 32 funds the
Federal administration of Marketing Agreements and Orders, which help
producers in the marketing of their milk, fruit, vegetables, and
specialty crops.
PARTNERSHIPS
Discussion of AMS' programs is not complete without a brief mention
of the extensive partnerships with other Federal agencies, State
agencies, and industry that characterize our program delivery.
The Agricultural Marketing Act of 1946, the authority on which we
rely for a great number of our programs, encourages Federal-State
cooperation in carrying out market facilitating activities. AMS depends
on strong partnerships with cooperating State and Federal agencies to
operate many of our programs. AMS provides guidance and coordination to
State agency partners who collect data, provide inspection, monitoring,
and laboratory services, and otherwise maximize the value of both State
and Federal resources through sharing and coordination. For instance,
AMS' Market News program maintains cooperative agreements with 38
States to coordinate their local market coverage with the regional and
national coverage needed for AMS' market reporting. State employees,
who inspect shipments of seed within a State, provide information to
AMS' Federal Seed program on potential violations in interstate
shipments. Our transportation and direct marketing programs work with
Federal, State, city and local policy makers to maintain an efficient
national transportation system and expand and improve market outlets
for U.S. agricultural products. Under Section 32, USDA's food purchase
programs have developed partnerships that maximize the unique expertise
that each agency brings to the process. AMS works in close cooperation
with the Food and Nutrition Service (FNS) and the Farm Service Agency
(FSA) to support USDA's nutrition assistance and administer surplus
commodity programs.
FISCAL YEAR 2007 BUDGET REQUEST
This leads us into our budget requests for fiscal year 2007. In
Marketing Services, we propose to strengthen the operations of the
National Organic and Federal Seed Act programs, implement a new Food
Protection program for purchased commodities, and continue work on the
Web-based Commodity Supply Chain Management System. The budget also
includes a proposal to terminate the Microbiological Data program and
institute new user fees for the development of grade standards and the
Federal administration of Marketing Agreements and Orders.
NATIONAL ORGANIC PROGRAM
The U.S. organic food industry has grown approximately 20 percent a
year to an $18 billion annual sales level and provides an important
marketing opportunity for many producers. We are requesting additional
funding of $1.1 million for fiscal year 2007 so that we can more
effectively manage the statutory and operational requirements of the
National Organic Program (NOP) to ensure that it meets producers' needs
and consumers' expectations.
The National Organic program (NOP) provides assurance for consumers
that organic products uniformly meet established requirements
nationwide. Program personnel work in partnership with the National
Organic Standards Board, which is appointed by the Secretary to
represent industry and consumer interests. In January, six new members
were appointed to the Board. Based on earlier Board recommendations,
AMS has hired an Executive Director and developed a plan to establish a
peer review panel. The panel will assist in evaluating applications of
certifying agents seeking accreditation and ensure that the
accreditation process is consistent with the intent of the law.
The budget request will provide the funds needed for independent
peer audits that evaluate all aspects of the NOP accreditation program
and for program staffing to implement the results of those audits and
otherwise assist in the delivery of this program. The audits, which
will be conducted every 2 years, are necessary to maintain the
program's credibility with the organic industry and for continuous
improvement of the program's management systems.
The program also needs additional resources to avoid interruption
of organic production. As provided in statute, the approvals for some
174 materials originally placed on the National List of approved and
prohibited substances for organic production will sunset in October
2007. AMS program staff works with the National Organic Standards Board
to update and maintain the National List and each of the expiring
materials must be re-evaluated. To ensure that the Board and all
interested parties have sufficient time to evaluate such a large number
of materials, AMS published an Advance Notice of Proposed Rulemaking in
June 2005 that began the public comment process on whether the specific
exemptions or prohibitions should be continued. Due to heightened
interest, technological obsolescence, or available alternatives, we
expect that almost one-third of those materials will have to undergo
independent scientific reviews before their use can be reauthorized.
Our fiscal year 2007 budget request includes funding for the program to
work with the Board to complete the re-evaluation of the National List.
The requested funding also will provide the resources needed to
resolve other issues facing the program: (1) strengthening compliance
and enforcement activities to maintain trade and consumer confidence;
(2) developing organic standards for additional products, which will
require extensive public input; and (3) dealing with current issues
such as recent amendments to the Organic Foods Production Act and
questions on access to pasture for organically produced ruminants.
Although Congressional action amending the Organic Foods Production Act
of 1990 (OFPA) restored the program to its status before the decision
by the U.S. District Court for the District of Maine in the case of
Harvey v. Johanns, certain procedural issues remain to be resolved. The
court found, on June 9, 2005, that USDA had in two instances exceeded
its statutory authority in developing program regulations. To reduce
the impact of the court's ruling on the organic industry, Congress
amended the OFPA on November 10, 2005, to permit the use of synthetic
ingredients and the transitioning of dairy farms.
FEDERAL SEED ACT PROGRAM
Our fiscal year 2007 budget request includes an increase of
$432,000 for our Federal Seed Act program. The Federal Seed Act
protects anyone who purchases seed by prohibiting false labeling and
advertising on seed shipped interstate. The program prevents financial
losses to farmers by detecting mislabeled, low quality seed before it
is planted and creates a level playing field for seed companies that
market truthfully labeled seed. In States where seed monitoring
programs exist, AMS works with State partners who refer interstate
violations to us. However, in States that do not have their own
monitoring programs, we estimate that the percentage of mislabeled seed
doubles. To better enforce the Act to protect growers, we propose to
assume seed testing in 8 States--Maine, Vermont, New Hampshire,
Connecticut, Rhode Island, New York, Michigan, and Wisconsin--that
receive most of their seed from other States but do not have their own
monitoring programs.
FOOD PROTECTION PROGRAM
For fiscal year 2007, we are requesting a $2.75 million increase in
Marketing Services to establish a new Food Protection program that will
better protect the recipients of commodities that are purchased by USDA
and distributed through the National School Lunch Program (NSLP) and
other Federal nutrition assistance programs.
The Food Safety and Inspection Service (FSIS) and the Food and Drug
Administration (FDA) are doing significant work with the food industry
to promote food defense. AMS is pleased to be participating in several
FSIS and FDA initiatives. Additional funding is necessary to ensure
that all possible actions are taken in assessing and eliminating
vulnerabilities in the production and distribution of foods for NSLP
and other Federal nutrition assistance programs that serve vulnerable
population segments. The resources we are requesting will enable us to
work effectively with our vendors in their protection of their
production facilities and with distributors in the transport of food
products to State warehouses. AMS will ensure that our vendors are
aware of FSIS' and FDA's food defense guidance and that they are early
and effective adopters of that guidance.
In full partnership with FSIS and FDA, AMS will work with the
vendor community to conduct vulnerability assessments, develop guidance
on protecting products purchased for distribution through Federal
programs, fund studies on improving security through safer packaging
and transportation, and incorporate food protection attributes into our
purchase specifications. AMS has begun developing specialized training
materials to ensure that agency staff involved in contract acceptance
are properly trained and supervised. With additional resources, we plan
to offer food protection training for about 6,000 employees of State
partner agencies, along with workshops and training sessions for vendor
employees. With the funds being requested we can protect Federal
commodity purchases and help advance the food defense efforts of FSIS
and FDA by ensuring that AMS' vendors are implementing effective food
defense plans in their facilities.
FEDERAL-STATE MARKETING IMPROVEMENT PROGRAM
The Federal-State Marketing Improvement Program (FSMIP) helps to
resolve local and regional agricultural marketing problems by awarding
Federal matching grant funds for projects proposed by State agencies.
Our fiscal year 2007 budget request includes $1.3 million for FSMIP.
These matching grant funds are made available to State departments of
agriculture and other State agencies for 25 to 35 projects each year,
with the State agencies contributing at least half of the project cost.
In 2005, the program allocated grant funds to 21 States and Puerto Rico
for a total of 27 projects, including studies on linking producers with
new buyer groups and innovative uses for locally important agricultural
products. The program encourages projects that use a collaborative
approach between the States, academia, and the farm sector, that have
regional or national significance, and that address challenges or
opportunities posed by the global economy, changing consumer
preferences, agricultural diversity, technical innovation,
transportation, and distribution.
WEB-BASED SUPPLY CHAIN MANAGEMENT SYSTEM (WBSCM)
For fiscal year 2007, we are proposing to continue development of
the Web-based Supply Chain Management System at a reduced level of $9.9
million, and we are requesting funding from Marketing Services so that
this project is funded from discretionary resources. As $20 million was
provided from Section 32 in fiscal year 2006, our budget request for
Commodity Purchases Administrative funds in fiscal year 2007 has been
reduced by that amount.
The WBSCM system will support $2.5 billion worth of USDA food
purchases distributed through the National School Lunch Program and
other domestic and international food assistance programs. WBSCM will
replace USDA's existing Processed Commodity Inventory Management System
(PCIMS) that links the procurement and distribution functions of AMS,
FNS, and FSA. PCIMS is over 15 years old and is inflexible, resource
intensive, and costly to maintain. AMS initiated and coordinated the
budget request for this initiative on behalf of all three agencies.
The implementation of WBSCM will save USDA's nutrition programs
several million dollars annually, in operational and maintenance costs,
increased productivity, and reduced purchase and shipping costs. WBSCM
will create a single point of access for customers, allowing the
agencies to share information with customers more quickly and
conveniently. The new system will improve efficiency by greatly
reducing the time required for processing purchases; shortening
delivery times; improving USDA's ability to collaborate with other
Departments; improving reporting capabilities; reducing transportation,
inventory, and warehousing costs; and enabling future systems updates
as needed. Successful completion of this initiative will support clean
financial audits for the Department, the agencies' ability to
effectively and efficiently work with recipients and vendors, and
USDA's ability to respond to natural disasters.
MICROBIOLOGICAL DATA PROGRAM TERMINATION
The fiscal year 2007 budget does not request funding to continue
the Microbiological Data Program (MDP) which was established in 2001 to
establish a national database on foodborne pathogens on domestic and
imported produce. It is difficult to determine to what extent the data
obtained through this program are used to support risk assessments by
other Federal agencies such as the Food and Drug Administration.
Furthermore, the use of these data by agencies, such as the Centers for
Disease Control and Prevention, involved in epidemiological
investigations aimed at determining the source of outbreaks of
foodborne illness is limited because data on sample origin is not
collected, as directed by Congress. In response to these concerns and
the need to limit Federal spending, the program is proposed for
termination in 2007.
NEW USER FEES
Our Marketing Services request for fiscal year 2007 includes $2.2
million to be recovered through new user fees, based on a proposed
legislative change that would convert most of our domestic standards
activities to user-fee funding. USDA will submit legislation that will
amend the Agricultural Marketing Act of 1946 and authorize the agency
to implement, collect, and retain user fees for domestic standards that
are associated with AMS' grading and certification services. Also,
$12.3 million is proposed to be recovered for the Federal
administration of Marketing Agreements and Orders through increased
assessments on program beneficiaries, which is currently funded through
Section 32.
STANDARDS USER FEES
This budget again proposes to recover the costs for developing and
updating domestic standards through user fees paid by those requesting
AMS' grading and certification services. This proposal was recommended
by the Program Assessment Rating Tool (PART) review conducted for the
fiscal year 2006 budget. On average, we expect the cost for Standards
development will be about 2 percent of the cost of grading services.
The Department has proposed a legislative amendment authorizing
standards user fees.
AMS' Standardization program works closely with interested parties
in agriculture and the food marketing system to ensure that quality
descriptions are aligned with current U.S. marketing practices because
efficient markets need widely-recognized agricultural product
descriptions in commercial sales and purchases. The agriculture
industry uses these descriptions to convey commodity quality in
purchase specifications and sales contracts. AMS currently maintains
about 600 U.S. agricultural quality standards for domestic and
international trading of cotton, tobacco, dairy products, fruits and
vegetables, livestock, meat, poultry, eggs, and rabbits.
The Standardization program also supports exports of U.S.
agricultural products by representing the interests of U.S. producers
in a variety of international standards development organizations. We
are proposing to retain appropriations to fund these activities.
MARKETING AGREEMENTS AND ORDERS USER FEES
Marketing Agreements and Orders are requested by producers and
handlers to help establish orderly marketing conditions for milk,
fruits, vegetables, and tree nuts. AMS evaluates and conducts hearings
on proposed Marketing Orders, which are subject to approval by
producers of the regulated community. Section 32 funds have been
appropriated for Federal costs in administering the order at the
national level, including public hearings, referenda on new programs
and proposed revisions, and enforcement. The Milk Marketing Order
Administrators and Fruit and Vegetable Marketing Order Committees, who
oversee local administration of Marketing Orders, operate on
assessments paid by their industries. Our fiscal year 2007 budget
proposes to charge user fees to recover the cost of Federal oversight.
The assessments already charged to beneficiaries for local program
administration would be increased to cover Federal costs. USDA is
preparing a legislative amendment to authorize recovery of these costs.
BUDGET REQUEST SUMMARY
Our budget request includes $81.5 million in appropriated funds and
$2.2 million in new user fees for a total budget of $83.7 million in
Marketing Services; we also request $1.3 million for FSMIP grants
funding. For administration of Section 32 activities, we request $11.6
million to support commodity purchasing and a total of $16.4 million
for the Marketing Agreements and Orders program--$4.1 million in
appropriations and $12.3 million from user fees. Our Marketing Services
and Section 32 administrative funding requests include an increase for
pay costs.
Thank you for this opportunity to present our budget proposal.
______
Prepared Statement of Dr. W. Ron DeHaven, Administrator, Animal and
Plant Health Inspection Service
Mr. Chairman and members of the Subcommittee, it is a pleasure for
me to represent the Animal and Plant Health Inspection Service (APHIS)
before you today. APHIS is an action-oriented agency that works with
other Federal agencies, Congress, States, agricultural interests, and
the general public to carry out its mission to protect the health and
value of American agriculture and natural resources. This mission is
vital not only to protect the livelihoods of agricultural producers and
the industries related to them, but also to United States homeland
security and food and agriculture defense. The past year has brought
many challenging agricultural issues our way, such as the threat of a
pandemic Highly Pathogenic Avian Influenza (HPAI) outbreak and Bovine
Spongiform Encephalopathy (BSE); outbreaks of Medfly, Sudden Oak Death,
and Emerald Ash Borer; as well as the spread of citrus canker in
Florida due to the heavy hurricane season last year. APHIS remains
committed to preventing the spread of animal and plant pests and
diseases in the United States and our Agency has continued its vigilant
effort to prevent foreign agricultural pests and diseases from entering
the country. We also remain committed to keeping American agricultural
products moving overseas. APHIS' mission of protecting the health and
value of United States agricultural and natural resources encompasses a
wide variety of activities. I would like to report on our fiscal year
2005 highlights, and our fiscal year 2007 budget request.
FISCAL YEAR 2005 HIGHLIGHTS
Pest and Disease Exclusion Activities
APHIS' efforts begin with offshore threat assessment and risk
reduction activities at the sources of exotic agricultural pests and
diseases. Through our pest and disease exclusion programs, we follow
animal and plant health throughout the world and use this information
to set effective agricultural import policy, and facilitate
international trade by clarifying and amending import requirements, as
necessary. Our off-shore risk reduction activities also include
conducting pest and disease eradication programs in foreign countries
and pre-clearance inspection of certain commodities in off-shore
locations; performing intense monitoring and surveillance for exotic
fruit flies and cattle fever ticks in high-risk, border areas of the
United States; and cooperating with the Department of Homeland
Security's Bureau of Customs and Border Protection (CBP) to inspect
arriving international passengers, cargo, baggage, mail, and other
means of conveyance.
Officials with our Agricultural Quarantine Inspection, Trade Issues
Resolution Management, Foreign Animal Disease/Foot and Mouth Disease
(FAD/FMD), and Import/Export programs track plant and animal health
issues around the world and use the information to set import policies
to ensure that agricultural diseases are not introduced through
imports. This information also helps determine what pests and diseases
might have pathways into the United States and informs our monitoring
and surveillance efforts here at home. APHIS is establishing a formal
international information gathering program under the FAD/FMD and Pest
Detection line items to build on these efforts. Through its off-shore
pest information system, APHIS has identified more than 600 plant pests
that pose risks to U.S. agriculture. APHIS uses this information to
provide guidance to CBP on inspection protocols and to target cargo
from certain areas for increased inspection.
To ensure our import regulations are enforced and adequately
protect United States agricultural and natural resources, we work
closely with CBP to monitor and intercept prohibited items that arrive
at United States ports of entry. In fiscal year 2005, agricultural
inspectors checked the baggage of nearly 66 million arriving passengers
and cleared 49,394 ships and 2,239,813 cargo shipments. In total,
agricultural inspectors intercepted 49,665 reportable pests at land
borders, maritime ports, airports, and post offices. These include
exotic fruit flies, various moth species, scale insects, and rust
diseases.
In fiscal year 2005, APHIS and CBP also began enforcing new entry
requirements for solid wood packaging materials, which can harbor
serious forest pests. The introduction of pests such as the Asian
longhorned beetle and emerald ash borer has been linked to solid wood
packaging materials used as crates and boxes for shipping all kinds of
commodities. The new regulations are based on an international standard
that will be used by more than 150 countries to address this world-wide
problem.
APHIS continued to support the FMD barrier between Central America
and Columbia and began plans to move it further away from the United
States to reduce the risk of an FMD introduction. We reported 29 FMD-
positive cases in countries bordering Columbia: 21 in Ecuador and eight
in Venezuela. Agency officials in these two countries maintained
relationships with local governments and strengthened cooperative
agreements for FMD eradication. In particular, we supported 15 new
cattle movement control posts along the Columbian-Ecuador border that
will begin operating in November 2007 to establish a buffer zone to
prevent the introduction of FMD in Columbia.
APHIS is actively engaged in ensuring that U.S. agricultural
producers benefit from the global trade system established under the
World Trade Organization (WTO), particularly the WTO Sanitary/
Phytosanitary (SPS) Agreement. APHIS' scientific and technical
expertise is key to enforcing our rights under the SPS Agreement
involving animal and plant health measures. As a direct result of our
efforts, 79 SPS trade issues were resolved in fiscal year 2005,
allowing trade of U.S. agriculture exports worth close to $1.4 billion
to occur. These accomplishments involved retaining or expanding
existing markets as well as opening new markets for U.S. products. The
products involved range from poultry exports to China, apples to Japan,
stonefruit to Mexico, almonds to India, and feeder cattle to Canada.
Our efforts to remove unjustified trade barriers related to BSE and
AI are prime examples of APHIS work in this area. In fiscal year 2005,
we successfully addressed barriers for U.S. poultry and poultry
products in 25 export markets worth a combined $254 million. We
resolved BSE-related trade issues involving 19 foreign markets for U.S.
bovine genetics, beef and beef products, allowing exports worth $58
million in fiscal year 2005. Furthermore, APHIS leadership in
international standard setting resulted in important science-based
changes to the international standards for BSE and AI that we believe
will encourage greater reliance on sound science in the trade of beef
and poultry products.
Animal and Plant Monitoring and Surveillance
To minimize agricultural production losses and export market
disruptions, APHIS quickly detects and responds to new invasive
agricultural pests and diseases, or other emerging agricultural health
threats, through our plant and animal health monitoring programs. The
Agency creates and updates endemic pest and disease information
systems, and monitors and conducts surveys in cooperation with States
and industry. APHIS also conducts surveys for exotic plant pests and
investigates reports of suspicious animal pests and diseases to reduce
their spread, which eliminates significant losses and helps maintain
pest-free status for export certification of agricultural commodities.
The Animal Health Monitoring and Surveillance (AHMS) and Pest
Detection programs coordinate national detection efforts for animal and
plant pests and diseases. Both work closely with State and university
cooperators to ensure that any introduction of exotic or foreign pests
and diseases is quickly detected. These programs are also working
closely with USDA's Cooperative State Research, Education, and
Extension Service (CSREES) to coordinate the National Animal Health
Laboratory Network and the National Plant Diagnostic Network to
increase testing capacity in the United States for economically and
environmentally significant animal and plant diseases.
To quick detect and contain foreign animal disease incursions from
spreading, APHIS thoroughly investigates all suspicious situations. In
fiscal year 2005, the AHMS program conducted 1,027 foreign animal
disease investigations, up from 870 in fiscal year 2004. The most
common investigation was for vesicular conditions. Most suspected cases
were investigated and subsequently diagnosed as not being an FAD. The
program also continued to implement an enhanced surveillance program in
response to the December 2003 detection of BSE in Washington State.
With additional funding from the Commodity Credit Corporation, as of
March 20, 2006, APHIS has sampled more than 660,000 animals for BSE
since the inception of the enhanced surveillance program. To date, two
samples have tested positive. Most samples were from high-risk
categories (such as those animals exhibiting signs of central nervous
system disorders); however, we also tested more than 21,000 samples
from clinically normal adult animals. APHIS is in the process of
analyzing data from the enhanced surveillance effort to determine what
appropriate conclusions to draw about BSE prevalence, though it
certainly would not be premature to say that the incidence of BSE in
the United States is extremely low. At the conclusion of the enhanced
BSE surveillance effort, we will continue our BSE monitoring program by
conducting a minimum of 40,000 tests annually, which would still allow
us to find BSE in one million cattle, with a confidence level of 95
percent.
To facilitate response efforts in the event of a future foreign
animal disease outbreak, APHIS and its State and industry cooperators
continue to implement the National Animal Identification System (NAIS)
designed to identify, within 48 hours of discovery, any agricultural
premise exposed to a disease so that potential outbreaks can be
contained and eradicated as quickly as possible. The NAIS is a
networked computerized system that will allow us to identify livestock
and poultry and record their movements over their life-spans. All 50
States, five Tribes, and two U.S. Territories are currently registering
premises with an estimated total of 213,000 premises registered. APHIS
and its State and Tribal cooperators are registering hundreds of
premises each week, and we are also in the preparation stage to begin
allocation of individual animal identification numbers.
Through the Pest Detection program, APHIS targets pests based on
their risk of entry and potential to cause significant economic or
environmental damage. In fiscal year 2005, our national Cooperative
Agricultural Pest Survey network resulted in the detection of several
significant pests and diseases, including citrus greening in Florida
and swede midge and sirex beetle in New York. While the responses to
these pests will differ based on many factors, the early detections
made by the Pest Detection program are allowing APHIS or the affected
State to take action to address the outbreaks and mitigate their
effects.
In addition to conducting traditional surveys, the Pest Detection
program and its cooperators are implementing ongoing monitoring
activities at high-risk sites such as nurseries and warehouses that
receive international cargo. In June 2005, California personnel
detected an Asian longhorned beetle (ALB) introduction at a Sacramento
warehouse as part of these efforts. ALB is present in urban locations
in New York, New Jersey, and Chicago, Illinois. To control the beetle
in these places, APHIS and cooperators have removed more than 10,000
trees at a significant cost to U.S. taxpayers. Because the Sacramento
introduction was detected and addressed at its source, APHIS and State
officials believe they have eliminated the threat of an ALB infestation
in California by fumigating the warehouse and quickly tracking other
products from the same shipment. Surveys will continue through 2008 to
make certain that the beetle is not present.
In fiscal year 2004, Asian soybean rust (SBR) was detected for the
first time in the United States. Because SBR cannot be eradicated,
soybean producers must adjust to its presence and the costs associated
with it, namely the application of fungicides to protect crops. Early
detection of SBR in each new area is critical for effective disease
management because the application of fungicides is most effective if
applied as a preventive measure, before a field is infected. However,
fungicide application is cost prohibitive (an average of $25 per acre)
if a particular area is not at risk for infection. Accordingly, USDA
(including APHIS and CSREES) implemented a short-term monitoring and
surveillance network for the disease in fiscal year 2005. The survey
data collected by the program in 36 States provided soybean producers
with accurate information to use in determining whether or not to treat
their fields and prevented the unnecessary application of fungicides.
Under the Animal and Plant Health Regulatory Enforcement program,
our Investigative and Enforcement Services unit continues to provide
support to all APHIS programs by conducting investigations of alleged
violations of Federal laws and regulations under APHIS' jurisdiction
and taking appropriate civil or criminal enforcement actions.
Regulatory enforcement activities prevent the spread of animal and
plant pests and diseases in interstate trade. In fiscal year 2005,
APHIS conducted 842 investigations involving animal health programs,
resulting in 440 warnings, 104 civil penalty stipulations, three
Administrative Law Judge Decisions, and $345,044 collected in fines.
APHIS also conducted 1,773 investigations involving plant quarantine
violations resulting in 456 warnings, 744 civil penalty stipulations,
157 Administrative Law Judge decisions, and approximately $2 million
collected in fines.
The Agency maintains a cadre of trained professionals prepared to
respond immediately to potential animal and plant health emergencies.
APHIS' Emergency Management System (EMS) is a joint Federal-State-
industry effort to improve the ability of the United States to
successfully manage animal health emergencies, ranging from natural
disasters to introductions of foreign animal diseases. The EMS program
identifies national infrastructure needs for anticipating, preventing,
mitigating, responding to, and recovering from such emergencies. The
Preparedness and Incident Command group of the EMS continued its
ongoing efforts to complete, review, and update response plans for
foreign animal diseases, such as BSE, Avian Influenza, and Classical
Swine Fever.
Pest and Disease Management
APHIS also works closely with State, industry, and academic
partners to maintain national detection networks and emergency response
teams for plant and animal pest and disease outbreaks that may occur
here in the United States. We work with these same partners to manage
or eradicate economically significant endemic pests and diseases, and
manage wildlife damage to agricultural and natural resources.
APHIS continues the cooperative effort with States and cotton
producers to eradicate the Boll Weevil, and, by the end of fiscal year
2005, the program had eliminated the boll weevil from approximately 85
percent of the 15 million acres of cotton grown in the United States,
up from 80 percent the previous year. We are on track to achieve full
eradication by the end of fiscal year 2009.
At the end fiscal year 2005, 47 States were in full compliance with
the Johne's national program standards with the goal being 45 States
enrolled. Only 3 States, Massachusetts, Montana, and Wyoming, have not
adopted the Voluntary Bovine Johne's Disease Control Program (VBJDCP).
By the end of the year, 7,860 herds were enrolled in the VBJDCP. Since
the initial goal was to enroll 4,000 herds, we exceeded the target by
96 percent.
APHIS continues to address the last stubborn pockets of endemic
animal diseases such as pseudorabies, brucellosis, and bovine
tuberculosis (TB). At the end of fiscal year 2005, all 50 States and 3
territories were in Stage V (free) status for pseudorabies. A full
declaration of National Pseudorabies eradication will be possible after
all 50 States and 3 territories have maintained free status for 2
consecutive years. Throughout fiscal year 2005, 48 States and three
Territories remained classified at Brucellosis Class Free status, and
two States, Texas and Wyoming, continued their Brucellosis Class A
status classification for bovine brucellosis. In addition, at the end
of fiscal year 2005, the TB program designated 49 States and
Territories and portions of two others as accredited TB-free, thus
exceeding the target of 47 States and territories considered class
free.
Through our Wildlife Services Operations program, the Agency's
cadre of wildlife disease biologists provided technical assistance,
conducted surveillance, and maintained control of more than 18 wildlife
diseases including Chronic Wasting Disease, West Nile Virus, bovine and
swine brucellosis, pseudorabies, classical swine fever and plague. In
addition, APHIS reinforced oral rabies vaccination zones along the
Appalachian Ridge through the distribution of 5.52 million baits on
31,000 square miles from the Ohio-Pennsylvania border through northern
Alabama.
APHIS wildlife biologists provided wildlife hazard management
assistance to over 580 airports nationwide for the protection of human
safety and property in fiscal year 2005, more than 12 times the amount
in 1990 with only 42 airports. Wildlife strikes cost U.S. civil
aviation nearly $500 million in 2004.
APHIS has been challenged with numerous emergencies over the last
several years. As such, we took quick and aggressive action to address
plant and animal health situations with BSE, Mediterranean fruit fly,
citrus canker, sudden oak death, and emerald ash borer. The Secretary
approved approximately $177 million in Commodity Credit Corporation
funding releases for APHIS programs in fiscal year 2005, of which $8
million was funded through unused balances and $169 million from new
funds.
Animal Care
APHIS ensures the humane care and treatment of animals covered
under the Animal Welfare Act (AWA) and the Horse Protection Act. Under
this legislation, first enacted in 1966 and amended several times
thereafter, APHIS carries out activities designed to ensure the humane
care and handling of animals used in research, exhibition, the
wholesale pet trade, or transported in commerce. APHIS places primary
emphasis on inspection of facilities, records, investigation of
complaints, inspection of problem facilities, and training of
inspectors. Regulations supporting the AWA provide minimum standards
for the handling, housing, feeding, transportation, sanitation,
ventilation, shelter from inclement weather, and veterinary care of
regulated animals. APHIS continues to focus on conducting quality
inspections at USDA licensed and registered facilities. The program's
risk-based inspection system concentrates activities on facilities
where animal welfare concerns are the greatest. During fiscal year
2005, the program conducted 16,474 inspections of licensees,
registrants, and prospective applicants. This represents a 9 percent
increase over fiscal year 2004.
APHIS conducted 575 animal care investigations in fiscal year 2005,
resulting in 391 formal cases submitted for civil administrative
action. We also issued 219 letters of warning for animal care. During
fiscal year 2005, we resolved 87 cases with civil penalty stipulations
resulting in $160,184 in fines. Administrative Law Judge decisions
resolved another 82 cases resulting in $946,184 in fines. High-priority
and significant cases included several involving the sale of dogs and
exotic animals by unlicensed dealers as well as numerous handling
violations involving exhibition animals attacking and/or injuring the
public.
Scientific and Technical Services
The programs within this component ensure the effectiveness of the
technology and protocols used in APHIS programs. The Agency conducts
these programs to develop new or improved methods for managing wildlife
damage and detecting and eradicating animal and plant pests and
diseases. The Agency also conducts laboratory testing programs to
support disease and pest control and/or eradication programs.
Additionally, those programs provide advice and assistance to APHIS on
environmental compliance requirements with respect to pesticide
registration and drug approvals for products used in implementing these
programs.
APHIS has successfully regulated the biotechnology industry for
almost 20 years. During that time, the Agency has overseen
approximately 10,000 field trials without any adverse impacts on human
health or significant environmental harm, and has evaluated more than
90 petitions for deregulation to ensure these plants posed no threat to
other plants or the environment. As of September 30, 2005, APHIS has
granted 68 petitions for deregulation for varieties of the following
crops: tomatoes, squash, cotton, soybeans, rapeseed, potatoes, papayas,
beets, rice, flax, tobacco, and corn.
To carry out its goal of safeguarding U.S. agricultural resources
from foreign pest and disease introductions, APHIS needs the
appropriate technological tools. The Plant Methods program develops new
or improved existing tools to enhance APHIS' safeguarding capabilities.
The program met its fiscal year 2005 performance target of developing
five new quarantine treatments or detection methods or improving
existing ones for commodities of trade.
In our Veterinary Biologics program, APHIS issued 97 product
licenses in fiscal year 2005. Veterinarians and animal owners now have
16 new products for the diagnosis, prevention, or treatment of animal
diseases. Of the 16, four new product licenses were issued for
biotechnology-based products.
APHIS exceeded its long-term performance measure target in fiscal
year 2005 to have 39 States involved with the National Animal Health
Laboratory Network (NAHLN). At the end of fiscal year 2005, the NAHLN
consisted of 49 State and university laboratories in 41 States that are
available to assist our National Veterinary Services Laboratory in
animal disease testing. The laboratory network forms the nation's
strongest weapon against bioterrorism: an effective network of
laboratories capable of integrated and coordinated response to
emergencies that could otherwise devastate the U.S. economy and food
supply. This key resource of APHIS has increased testing capacity
significantly. APHIS and its NAHLN partners are currently testing up to
10,000 samples per week for BSE, 4,800 samples per week for chronic
wasting disease, and 4,800 samples per week for scrapie. Additionally,
in a period of extraordinary demands caused by an adverse animal
disease event, the network could test up to 18,000 samples per day for
AI/Exotic Newcastle Disease or 15,000 samples per day for classical
swine fever or FMD.
Growing populations of Canada geese, a Federally-protected species,
continue to pose problems for homeowners across the country. In
September 2005, APHIS' National Wildlife Research Center (NWRC)
received a Notable Technology Development Award from the Federal
Laboratories Consortium Mid-Continent Region for its role in the
development and registration of OvoControl-G Canada goose bait. Which
is the first EPA approved oral contraceptive of its kind. The NWRC also
continued work to support the Environmental Protection Agency's
approval of a new chemical treatment to reduce the hatchability of eggs
laid by treated Canada geese.
FISCAL YEAR 2007 BUDGET REQUEST
The fiscal year 2007 Budget Request for Salaries and Expenses
totals just over $953 million, an increase of $146 million over the
fiscal year 2006 Agriculture Appropriations Act and an increase of $75
million when the fiscal year 2006 supplemental for avian influenza is
included. About $9.2 million of the increase is for pay raises. Of the
total request, approximately $453 million is identified in the
President's Homeland Security initiative, including $314 million in
discretionary funding. Of the $453 million, $188 million is also
identified in the President's Food and Agriculture Defense Initiative,
which serves to protect the agriculture and food system in the United
States from intentional, unintentional, or naturally occurring threats.
The increase, approximately 15 percent above the fiscal year 2006
appropriation, is for initiatives designed to address the increasing
domestic and international threats to the health of United States
agriculture. In the international arena, APHIS plans to use additional
funding to establish a formal international information collection
program that will help us set agricultural import policy and inform
others of our monitoring and surveillance efforts here in the United
States, and protect and expand the $53 billion annual agricultural
export market, among other things. We are also addressing HPAI threats
in other countries by requesting additional funding to provide
technical assistance to develop knowledge and experience in
surveillance and control techniques, which will help prevent the spread
of HPAI to the United States. On the domestic side, our efforts include
enhancements to both animal and plant health surveillance systems and
diagnostic capabilities; the ability to track animal and plant
pathogens and toxins identified as Select Agents; the build up of our
animal disease vaccine bank; the ability to address wildlife disease
threats to livestock health; an investment to substantially reduce
emergency fund transfers for a variety of plant pest and disease
programs; and continuing enhancements to our Biotechnology Regulatory
Services program. Our goal is to reduce economic damage that pests and
diseases can cause to American agriculture. As such, APHIS is in the
process of developing a new performance measure that will allow us to
assess the value of the pest and disease damage that our programs are
preventing or mitigating, and we will utilize this information to help
determine future funding requests. We will begin applying this measure
to all of our programs.
The following paragraphs detail some of the funding increases and
associated accomplishments expected under the fiscal year 2007 budget
request:
Pest and Disease Exclusion
An increase of $6.4 million for the Foreign Animal Disease/Foot-
and-Mouth Disease program and $4.7 million under Pest Detection to
expand the program's formal collection of international health
information, which will allow APHIS to conduct risk assessments and
regulate imports more effectively as well as provide an overall picture
of global animal health trends.
An increase of $13.85 million for the Fruit Fly Exclusion and
Detection program to strengthen the Moscamed (Mediterranean fruit fly)
program along the Mexico-Guatemala border to prevent the northward
spread of the Medfly into Central Mexico thereby reducing the threat to
the United States.
An increase of $4.68 million for the Trade Issues Resolution and
Management program to increase work on Free Trade Agreements, and
expand and retain markets to provide new market access and facilitate
trade worth $2.4 billion in fiscal year 2007.
Animal and Plant Monitoring and Surveillance
An increase of $8.5 million for the Animal Health Monitoring and
Surveillance program to enhance the current disease monitoring and
surveillance system by increasing and integrating its infrastructure to
better protect the nation's animals from emerging and foreign animal
disease. The fiscal year 2007 request also includes continued funding
for the maintenance of monitoring and surveillance of BSE
(approximately $17 million for 40,000 samples) and continued
implementation of the National Animal Identification System
(approximately $33 million).
An increase of $1.2 million for the Animal and Plant Health
Regulatory Enforcement to provide additional support to APHIS programs
by conducting investigations of alleged violations of Federal laws and
regulations under the Agency's jurisdiction.
An increase of $9.1 million for Emergency Management Systems to
improve readiness at the Federal, State, Tribal, and local levels to
respond to disease incursions or acts of bioterrorism, and respond
effectively and efficiently to all hazardous animal health incidents.
We will also stockpile sufficient levels of supplies, vaccines,
materials, and equipment needed to respond to an outbreak of 50 percent
of the most damaging disease agents, or four of the eight most damaging
and highly contagious foreign animal diseases.
$57 million for the new HPAI program (initially funded via fiscal
year 2006 supplemental appropriation) to continue the development of
the Agency's new HPAI surveillance and preparedness program through
efforts with international capacity building ($5.01 million) and
domestic surveillance and preparedness ($51.72 million).
An increase of $15.4 million for Pest Detection activities to
enhance early detection efforts through an increase in the number and
intensity of surveys conducted throughout the United States for high-
risk plant pests; enhance emergency response capabilities; and develop
molecular diagnostic tools for high-risk pests.
An increase of $1.8 million for the Select Agents program to
register facilities desiring to handle select agents, and enhance
current physical security requirements to expand the barcode inventory
tracking system.
Approximately $2 million for the new Wildlife Disease Monitoring
and Surveillance program to establish methods for surveillance data
collection in wildlife populations and investigate the prevalence of
specific diseases that may move from wildlife to domestic livestock or
poultry populations.
Pest and Disease Management
A $16 million shift in funding from Boll Weevil and Pink Bollworm
programs to establish a new program, Cotton Pests, to improve technical
efficiency by formally merging resources to simplify administration of
both programs and help move toward the goal of eradication of both
pests.
An increase of approximately $27 million for Emerging Plant Pests
to enhance survey and tree removal to control emerald ash borer ($21
million); continue conducting surveys for various citrus pests and
diseases in Florida ($2 million); conduct additional inspections in
nurseries to determine extent of P. remora (Sudden Oak Death) in
California, Oregon, and Washington State ($3.45 million); and continue
containment activities for Karnal bunt ($1.25 million).
An increase of approximately $10 million for Invasive Species to
establish a new competitive grant program to the private sector to
apply innovative and cost-effective methods for responding to and
controlling invasive species.
An increase of approximately $3 million for the Low Pathogenic
Avian Influenza (LPAI) program to continue addressing LPAI on a
national level in live bird markets and commercial industries, and
develop and oversee production of AI test reagents to be distributed to
State and industry laboratories approved to participate in the LPAI
program.
An increase of $3 million for the Wildlife Services Operations
Airport Safety program to enhance human safety by reducing wildlife
strikes to aircraft.
An increase of $1.75 million for rabies control under the Wildlife
Services Operations program to maintain the oral rabies vaccination
barrier to prevent the spread of this disease.
An increase of $5 million for Homeland Security and Food and
Agriculture Defense to enhance wildlife disease surveillance.
Animal Care
An increase of almost $1.5 million for the Animal Welfare program
to enhance current program operations through the application of the
new regulation to inspect facilities that contain mice, rats, and birds
not involved in research. We will continue to use a risk-based
inspection system to concentrate activities on facilities where animal
welfare concerns are greatest, while also developing strategies for
effective outreach and education programs to develop expertise and
promote voluntary compliance.
Scientific and Technical Services
An increase of $3.3 million for the Biotechnology Regulatory
Services program to enhance our infrastructure for a transgenic program
by conducting additional risk assessments; preparing environmental
assessments; advising on policies related to animal and disease agent
biotechnology; developing and implementing regulations and guidelines
regarding transgenic animals and disease agents; and providing
leadership to advance the Agency's use of biotechnology oversight to
protect and enhance American agriculture. We will also strengthen
regulatory validation activities by developing scientific personnel
exchange programs with academia and industry; conducting peer reviews
for significant scientific components of biotechnology policies and
regulations; and conducting quantitative analyses and studies to
support regulatory decisions.
An increase of $1 million for Plant Methods Development
Laboratories to establish a new National Crop Biosecurity Center to
coordinate technical and scientific needs for detecting and responding
to high-consequence plant pests and diseases. We also will assess
current and emerging threats and develop a laboratory accreditation
program to certify State and university laboratories to conduct tests
for high-risk diseases that have the potential to generate large
volumes of samples and overburden the current testing capacity.
An increase of $3.5 million for Veterinary Biologics to reduce the
time it takes to review and test new veterinary biologics products
entering the market. We also will address containment requirements to
meet the required standards for the use of select agents and toxins
maintained by the Center for Veterinary Biologics. In addition, we plan
to expand activities in pharmacovigilance (the post-marketing
monitoring of adverse events associated with the use of licensed
veterinary biological products) with the implementation of a standard
data system for sharing resources, data collection methods, and review
processes for adverse events reporting with the Food and Drug
Administration.
An increase of approximately $5.5 million for Veterinary
Diagnostics to expand diagnostics capability to include additional
foreign animal diseases; expand the National Animal Health Laboratory
Network to address significant biological and chemical threats to
animal agriculture and our national food supply; address security
requirements and meet standards related to Select Agents; and achieve
NVSL lab accreditation.
A $3.2 million shift in funding within Wildlife Disease Methods
Development to dedicate funding to conduct avian influenza methods
development research to improve environmental sample diagnostics, and
characterize and evaluate the risk that feral swine pose in the
generation and maintenance of avian influenza subtypes of domestic
animal and human health concern.
Decreases
To support our high priority programs while continuing to meet the
goal of reducing the Federal deficit, we propose several offsetting
decreases. Within our Pest and Disease Exclusion activities, we propose
a reduction of $2 million for the Hawaii Interline program within the
appropriated Agricultural Inspection Quarantine line item, which we
expect to conduct in the future via a reimbursable agreement with the
State of Hawaii; a reduction in Cattle Fever Tick activities to the
fiscal year 2005 level because we do not anticipate outbreaks occurring
outside of the quarantine zone nor an increase in incursions into the
quarantine zone; and, a reduction of $1.2 million in the Import/Export
program to dedicate resources to higher priority activities.
Within our Animal and Plant Monitoring and Surveillance activities,
we propose a $2.3 million shift in funding within the Animal Health
Monitoring and Surveillance program and an $830,000 shift in funding
within the Pest Detection program to dedicate resources to higher
priority activities.
Within our Pest and Disease Management activities, we propose a
reduction of $25.9 million for Boll Weevil program activities due to
the program's success in eradicating boll weevil, and other reductions
($1.5 million for Brucellosis; $3.3 million for Chronic Wasting
disease; $1.14 million for Grasshopper; $9.9 million for Johne's; $1.92
million for Pink Bollworm; and $763,000 for Noxious Weeds) to dedicate
resources to higher priority activities.
Also, in fiscal year 2007, we are re-proposing new user fees for
the Animal Welfare program, which would generate $8.22 million.
Finally, within our Scientific and Technical Services activities,
we propose a shift of $371,000 in our Veterinary Diagnostics program
and a $3.2 million shift in our Wildlife Disease Methods Development
program to dedicate resources to higher priority activities.
CONCLUSION
7 APHIS' mission of safeguarding United States agriculture is
becoming ever more critical. Although the processes by which we protect
America's healthy and diverse food supply are being increasingly
challenged by increased trade and tourism, APHIS is committed to taking
the lead in building and maintaining a world-class system of pest and
disease exclusion, surveillance, detection, diagnosis, and response.
Healthy plants and livestock increase our market potential
internationally, and thus contribute to a healthy U.S. economy. The
APHIS budget consists of interdependent components that, when combined,
truly protect the health and value of American agriculture and natural
resources.
On behalf of APHIS, I appreciate all of your past support and look
forward to continued, positive working relationships in the future. We
are prepared to answer any questions you may have.
______
Prepared Statement of James E. Link, Administrator, Grain Inspection,
Packers and Stockyards Administration
INTRODUCTION
Mr. Chairman and Members of the Committee, I am pleased to
highlight the accomplishments of the Grain Inspection, Packers and
Stockyards Administration (GIPSA), and to discuss the agency's fiscal
year 2007 budget proposal.
GIPSA's activities are an integral part of USDA-wide efforts to
support a competitive global marketplace for U.S. agricultural
products. Our mission is to facilitate the marketing of livestock,
poultry, meat, cereals, oilseeds, and related agricultural products,
and to promote fair and competitive trading practices for the overall
benefit of consumers and American agriculture.
We fulfill our service and regulatory roles through our Packers and
Stockyards Program, which promotes a fair, open, and competitive
marketing environment for the livestock, meat, and poultry industries
and our Federal Grain Inspection Service, which provides the U.S. grain
market with Federal quality standards and a uniform system for applying
these standards to promote equitable and efficient marketing.
ORGANIZATION
We carry out our mission with a dedicated staff of 680 employees
working in partnership with a variety of State and private entities.
Our Packers and Stockyards Program relies on three regional offices
which specialize in poultry, hogs, or cattle/lamb. Our grain inspection
services are delivered by the national inspection system, a network of
Federal, State, and private inspection personnel. The system includes 9
GIPSA field offices, 1 Federal/State office, and 56 State and private
agencies authorized by GIPSA to provide official services.
PACKERS AND STOCKYARDS PROGRAM
Our Packers and Stockyards Program (P&SP) administers the Packers
and Stockyards Act (P&S Act) to promote fair and competitive marketing
in livestock, meat and poultry for the benefit of consumers and
American agriculture. The P&S Act is intended to protect producers,
other market actors, and consumers against unfair, discriminatory, or
deceptive practices that might be carried out by those subject to the
Act.
To meet this objective, GIPSA seeks to educate, regulate and
investigate individuals and firms subject to the P&S Act; to respond to
anti-competitive behavior, unfair, deceptive, or unjustly
discriminatory trade practices; and to ensure livestock producers and
poultry growers are paid for their products. GIPSA takes corrective
action when there is evidence that firms or individuals have violated
the P&S Act.
In April 2005, the USDA's Office of Inspector General (OIG)
initiated an audit in response to Congressional concerns with the
Agency's management and oversight of P&SP. The audit identified four
primary areas where program management was not up to the high standard
that this Administration expects and our stakeholders deserve.
The OIG provided ten recommendations for strengthening P&SP. GIPSA
concurs with all recommendations and is taking immediate actions to
implement them. We have already taken steps to improve the management
of investigations, to correct how we categorize and track
investigations and to implement additional recommendations from prior
OIG and Government Accountability Office reviews. The Administration
takes the Inspector General's findings very seriously and we have
established an aggressive schedule to improve the enforcement of the
P&S Act.
While improvements are needed, P&SP has delivered valuable services
to the livestock, meatpacking, and poultry industries. With only 136
employees, we continued to regulate these industries, estimated by the
Department of Commerce in fiscal year 2002 to have an annual wholesale
value of $120 billion. At the close of fiscal year 2005, 5,569 market
agencies and dealers and 1,858 packer buyers were registered. In
addition, there were 1,443 facilities that provided stockyard services,
an estimated 6,000 slaughtering and processing packers, meat
distributors, brokers and dealers, and 202 live poultry dealers
operating subject to the P&S Act.
Our regulatory responsibilities are the heart of our mission to
administer the P&S Act. To this end, GIPSA closely monitors practices
that may violate the P&S Act. Last fiscal year, we conducted 1,936
activities related to compliance with the P&SP Act. These activities
included 1,491 regulatory activities such as financial audits and scale
check weighs and 445 investigations of P&S Act violations. As a result
of these investigations, P&SP helped recover over $14.1 million for
producers and enforced the restoration of nearly $350 million to
custodial accounts and business balance sheets to protect producers
from financial harm.
We continue to work with violating firms to achieve voluntary
compliance, and continue to initiate appropriate corrective action when
we uncover evidence that the P&S Act has been violated. In fiscal year
2005, with assistance from the Office of the General Counsel, we filed
18 administrative or justice complaints alleging violations of the P&S
Act. These formal disciplinary complaints resulted in 21 decisions
ordering the payment of $116,300 in civil penalties and suspending 7
registrants from operating for periods ranging from 21 days to 6 years.
In one specific case, GIPSA worked through informal resolution channels
to obtain voluntary compliance when a market agency and dealer
operation in the Midwest discovered one of its employees had defrauded
the company in excess of $1 million. Through GIPSA's timely
intervention, the firm secured sufficient financial protection so that
none of the company's livestock sellers suffered losses.
We regularly assist the FBI, State and local law enforcement
agencies with their investigations. Some of our investigations involve
overlapping jurisdiction, and sometimes these agencies call on GIPSA
for its expertise. In addition, we communicate with our sister agencies
within USDA, the Department of Justice, the Commodity Futures Trading
Commission, and local and State governmental organizations to discuss
common issues and when appropriate, coordinate plans.
GIPSA maintains a toll-free hotline (800-998-3447) as an avenue for
receiving complaints and other communications from livestock producers,
poultry growers and other members of the industry or general public.
Use of the hotline allows callers to voice their concerns or file a
complaint anonymously without fear of retaliation. In fiscal year 2005,
GIPSA's Packers and Stockyards Program received 39 hotline calls. Those
calls that related to livestock or poultry issues resulted in
investigations. To encourage voluntary compliance, we regularly attend
industry meetings and conduct orientation sessions (28 in 2005) for new
auction market owners and feed mills to educate them about their
fiduciary and other responsibilities under the P&S Act.
In fiscal year 2005, we continued working with stakeholders and
other interested parties to develop and publish two additional
voluntary industry standards for technologies used to assess quality
and determine payment for livestock, meat, or poultry. The tentative
code was published by the American Society for Testing and Materials in
the 2006 National Institute of Standards and Technology--Handbook 44
``Specifications, Tolerances and Other Technical Requirements for
Weighing and Measuring Devices'', which was released in October 2005.
The new standards will help producers receive full value for the
quality of livestock they produce as well as help packers pay only for
the product they want to purchase. We will continue to work with
stakeholders to develop additional standards, as needed, to enhance
transparency in the marketplace.
GIPSA continues to operate the Swine Contract Library (SCL) which
includes information pertaining to price, premiums, discounts, grids,
formulas, and other important contract terms extracted from offered and
available contracts used to purchase hogs. The data is available on
GIPSA's website on a real time basis. In October 2005, the reporting
requirements under the Livestock Mandatory Reporting Act of 1999 became
voluntary due to the sunset of the law.
GIPSA continues to administer a livestock and meat marketing study
that examines the broad issues surrounding packer ownership of
livestock. Research Triangle Institute (RTI), the firm with whom GIPSA
has contracted to complete the study, released an interim report in
August 2005. RTI began contacting survey respondents in November 2005
and collecting transaction data in February 2006. The final report is
scheduled for release in early 2007.
FEDERAL GRAIN INSPECTION SERVICE
Our Federal Grain Inspection Service (FGIS) facilitates the
marketing of U.S. grain and related agricultural products through the
establishment of standards for quality assessments, regulation of grain
handling practices, and management of a network of Federal, State, and
private laboratories that provide impartial, user-fee funded official
inspection and weighing services under the authority of the U.S. Grain
Standards Act and the Agricultural Marketing Act of 1946.
FGIS establishes terms and methods for quality assessments that the
grain industry uses to buy and sell about $50 billion of commodities
annually. These standards for quality assessments provide the U.S.
grain marketing system with the means to align post-harvested crop
quality with the diverse end-use needs of today's food and feed
industry. GIPSA currently maintains 131 unique standards and quality
assessment factors to characterize the quality of grain and grain-
related products.
We continue work with producers, technology providers, and food and
feed manufacturers to consensually identify the essential quality
attributes that require standard measurement to effectively
differentiate quality and add value to U.S. agriculture. In fiscal year
2005, GIPSA implemented artificial neural network (ANN) technology to
streamline and improve the accuracy of the wheat protein testing
program, and to offer, for the first time, a barley protein testing
service. The new official ANN protein testing services facilitate the
marketing of these grains by providing a fair, accurate, and
transparent third-party determination, backed by a national quality
control process, and standardized instrumentation, reference samples,
calibration, and procedures.
GIPSA also conducted activities related to soybeans in fiscal year
2005. GIPSA verified and adopted an American Oil Chemists' Society
(AOCS) gas chromatographic method as a reference method to measure
levels of various fatty acids in soybeans, including linolenic acid.
Soybeans with lower linolenic acid levels were introduced during 2004.
``Low-lin'' soybeans produce oil that has half the linolenic acid level
of commodity soybean oil, making it more stable and reducing or
precluding the need for hydrogenation--the process that creates
unhealthy trans fats in foods. This standard quality assessment method
will help the market capture the full value of this emerging product.
GIPSA continues to explore rapid tests for fatty acid contents of
soybeans and other grains.
We are also working with the wheat industry in an effort to regain
the U.S. wheat market share which has declined from 33 percent of the
international market in 1995 to an estimated 25 percent in 2005.
Our goal is to develop rapid measurement methods to differentiate
wheat quality at the first point of sale and allow the U.S. wheat
industry to better meet the needs of foreign buyers. To date, working
with the wheat industry, we have identified several key quality
attributes, such as gluten strength, that require rapid measures, as
well as the need to validate international reference methods relating
to the attributes.
In fiscal year 2005, GIPSA validated and adopted three widely used,
internationally recognized reference methods that assess various
aspects of protein quality in wheat: the Farinograph reference method
to measure water absorption and dough strength; the Glutomatic
reference method for wet gluten quantity; and the Alveograph reference
method to measure dough strength.
Gaining consensus on the salient wheat attributes and reference
methods will allow GIPSA to pursue the development of rapid analytical
methods for use at the first point of sale.
As we develop measures of new attributes entering the market, we
are ensuring the current measurement methods are accurate and cost-
effective. For example, we are working to transform the measurement of
grain moisture. Maintaining current calibrations for moisture
measurement is time consuming and resource intensive. Advances in the
basic means to measure moisture, led by GIPSA, have the potential to
greatly reduce maintenance costs and improve the accuracy of moisture
measurements over a much wider range. These advances will benefit the
entire grain industry, from producer to food manufacturer.
We are also working with stakeholders to ensure grading standards
further facilitate trade. GIPSA is developing national feed pea
standards to meet surging production and use of peas for feed. As the
global competition in soybean markets intensifies, we are collaborating
with the soybean industry to determine whether changes in analytical
methods and grading standards would improve the U.S. competitive
position. One grading factor under review is test weight per bushel, a
factor used to market soybeans in the United States for over a half
century, but not used by our major international competitors. We are
also working closely with the wheat industry to ensure the wheat
standards facilitate the expansion of the new and evolving market for
Hard White Wheat. In 2005, we amended the U.S. Standards for Wheat to
change the definition of contrasting classes in Hard Red Winter wheat
and Hard Red Spring wheat. The new standard and policy will ensure the
purity of both the Hard White and the Hard Red classes, which is
essential to promote market growth and meet the needs of those making
high-quality wheat products for consumers around the world. All of
these activities improve the American agriculture's ability to deliver
the specific quality of grain desired by food manufactures and
consumers, and strengthen its competitive position in the global
market.
In the biotechnology arena, we are improving the reliability and
accuracy of testing for the presence of modern biotechnology-derived
grains to help U.S. agriculture avoid market disruption as trading
partners around the world implement new import requirements. Our Test
Kit Evaluation Program validates the performance of commercially
available rapid tests for biotechnology-derived grains. Our Proficiency
Program improves the performance and reliability of government and
private laboratories that test for biotechnology-derived grains in the
United States and worldwide. More than 115 organizations participated
in the program in fiscal year 2005, compared to 22 in 2002.
In response to the results of the proficiency program, we are
working to harmonize international reference materials and
biotechnology measurement methods used in commerce to measure the level
of biotechnology-derived events in raw agricultural products. The
current focus of many laboratories is to assay for the presence or
absence of a particular transgenic event, whereas the regulatory
requirements evolving for agricultural products usually require
reliable methods to measure the quantity of a biotechnology derived
event.
Our international outreach goes beyond work in the area of
biotechnology. We work cooperatively with other government agencies to
support market development and remove obstacles to U.S. grain reaching
world markets.
In recent years, we have focused on providing technical support to
the Mexican and Asian markets. Last year, GIPSA worked with Mexico's
private and public grain sectors to harmonize sampling and analytical
methods with the goal of minimizing trade disruptions due to
differences between GIPSA-certified quality and an importer's own
quality assessment. We conducted seminars at three major grain
importing locations in Mexico for personnel from Mexican commercial
firms and government agencies to educate buyers on grain contracting,
U.S. grain standards, sampling, and inspection procedures. We also
spearheaded the establishment of a government-to-government grain
industry consultative group as a technical-level forum to address
cross-border grain quality issues. Finally, GIPSA led a USDA team that
visited key Mexican border inspection offices to facilitate cross-
border trade by addressing Mexico's inspection and clearance process
for U.S. grain shipments to Mexico.
Since fiscal year 2002, GIPSA has placed a temporary duty officer
in Asia to address immediate and long-term issues in the region, to
promote a better understanding and adoption of U.S. sampling and
inspection methods to minimize differences in inspection results and to
develop face-to-face relationships with customers, USDA cooperators and
government officials. During fiscal year 2005, a GIPSA officer served
on a 7-month assignment in the region. In fiscal year 2005, this
program allowed GIPSA to respond face-to-face to importers in Japan who
raised concerns regarding dockage levels in U.S. wheat; to Taiwanese
importers about differences in grain weight; and to representatives of
Malaysia and Singapore regarding U.S. soybean quality. We also were
able to share samples with Japan to allow them to monitor pesticide
residue levels in U.S. wheat, rice, and barley, before they implement
new domestic residue limits. Finally, GIPSA's representative
participated in several marketing seminars sponsored by USDA cooperator
organizations to inform importers and their governments about the role
and responsibilities of GIPSA and the national inspection system.
We also provide technical consultative services for international
customers. During fiscal year 2005, GIPSA facilitated the reopening of
Iraqi grain markets to the United States for the first time since 1999,
leading to wheat sales of $107 million in 2005. We provided technical
monitoring and on-site inspection expertise for U.S. wheat shipments
from their departure point in the United States to their arrival in
Syria and final destination in Baghdad.
Also during the fiscal year, GIPSA installed and check tested
laboratory equipment to inspect and grade wheat in Yemen; conducted
wheat grading and inspection seminars in El Salvador and Tunisia;
worked with Algerian grain buyers to address Karnal bunt concerns; met
with Peruvian officials to discuss the effects of their new rice import
regulations; developed sample collection procedures for Japan's
Ministry of Agriculture, Forestry and Fisheries; participated in
several international meetings on implementing the Biosafety Protocol;
continued to work with Chinese officials to discuss biotechnology, the
Biosafety Protocol, and their impact on trade; helped the USDA/Foreign
Agricultural Service and Animal and Plant Health Inspection Service
resolve various grain quality issues in other countries that would
otherwise have restricted U.S. grain exports; and briefed visiting
trade and governmental teams representing 44 countries around the
world.
In addition to facilitating the marketing of U.S. grain by
developing grain quality assessment methods and carrying out
international outreach efforts, GIPSA administers a national inspection
system comprising Federal, State, and private laboratories. These
laboratories provide valuable service to all sectors of the grain
industry on a user fee basis, 24 hours a day, 7 days a week. The world
recognizes the certificates issued by these laboratories as the gold
standard for grain quality certification. Buyers and sellers around the
world have confidence in and rely on the GIPSA certificate to trade
grain.
This confidence was earned. The dedicated Federal, State, and
private employees of the national grain inspection system work
tirelessly to ensure the integrity and reliability of the national
inspection system. The dedication and professionalism of GIPSA
employees was proven last year in the aftermath of Hurricanes Katrina
and Rita. Four GIPSA offices (New Orleans and Lake Charles, Louisiana,
and League City, and Beaumont, Texas) were in the paths of these
storms. Through the superlative efforts of employees in New Orleans,
Louisiana, and League City, Texas, all agency employees were located
and inspection personnel were working with industry with 48 hours after
the hurricanes passed to get U.S. export port operations in the Gulf
online. Within a week, employees in the affected area had set up an
alternate field office and were responding to industry service
requests. Local GIPSA employees, many of whose homes were lost or
destroyed, were on duty. Within 3 weeks, the New Orleans field office
was fully operational.
GIPSA's Beaumont, Texas, and Crowley/Lake Charles, Louisiana,
offices took direct hits from Hurricane Rita. The Crowley/Lake Charles
office suffered moderate damage and was fully functional within a week.
The Beaumont suboffice was severely damaged by Rita and closed for a
month but is now fully operational.
We are proud to report that no service requests were denied as a
result of the hurricanes. GIPSA personnel were on duty and ready to
provide service as soon as the industry resumed operations. Our local
personnel showed fortitude and determination in addressing both the
personal and work-related challenges engendered by the storms. All
told, GIPSA employees issued nearly 3 million certificates representing
approximately 245 million tons of grain during fiscal year 2005.
GIPSA continuously works to improve service delivery by this
network of laboratories and meet the needs of a changing market. In
fiscal year 2005, we revised the regulations on short-voyage
fumigations to facilitate the movement of waterborne grain shipments of
5 days or less duration.
EGOVERNMENT SOLUTIONS
Our most ambitious undertaking to improve program operations and
service to the public is a sweeping, multi-year project to upgrade
information management systems and modernize our business functions.
Our current information management system consists of several
independent systems that have served specific purposes over the years
well, but are not integrated. This has limited our ability to meet the
growing demand for electronic, or web-based, delivery of our services.
It also impedes our efforts to improve the cost effectiveness and
efficiency of our internal business practices. The enterprise-wide
system currently under development will modernize nearly every aspect
of GIPSA operations and provide a great opportunity to improve current
business practices and service delivery. The new system includes
twenty-seven applications to be built over 5 years.
New funding provided in fiscal year 2005 and fiscal year 2006
along with the redirection of existing funds has enabled GIPSA to begin
development on ten of the twenty-seven GIPSA Application Modernization
modules. Currently funded components of the new system will be deployed
incrementally in 2006 and 2007 with the first seven applications
scheduled for deployment in the spring of 2006. This long term
initiative is scheduled to continue through fiscal year 2009. We have
requested additional funding in fiscal year 2007 to support this
important initiative.
When completed, customers will have online access to the
information and applications they need to file complaints with GIPSA
via the Internet; receive status reports on a complaint; place claims
against bonds required under the P&S Act; register as a grain exporter
or livestock dealer; submit required annual reports; request grain
inspection services; receive reports on service status; see the status
of their user-fee account; and receive final certified results online
which will, in turn, allow customers to integrate official inspection
data into their own information and document management systems.
Private and State inspection agencies interested in being authorized to
provide official inspection services will also be able to apply for
GIPSA designation and re-designation on-line. Once officially
designated, these agencies will have direct access through the web to
GIPSA's extensive quality assurance program to ensure their inspection
results align with the official standards maintained by GIPSA.
This modernization effort will create synergy across GIPSA programs
and data sources, allowing GIPSA to improve internal program
efficiencies and effectiveness. This large multi-year initiative will
deliver improved performance and reduce costs years into the future.
PROTECTING THE HOMELAND
In addition, GIPSA has dedicated resources to homeland security
efforts. We continue to work closely with the USDA Office of Crisis
Planning and Management (OCPM) to refine the Department's and the
Agency's Continuity of Operations Plan (COOP) and to support and staff
the Department's Crisis Action Team (CAT). In fiscal year 2005, GIPSA's
COOP and CAT representatives participated in critical disaster-related
exercises and training sessions, including a major government-wide
exercise.
We provided technical assistance related to homeland security
issues to a number of industry and governmental groups, including the
USDA Homeland Security Working Group; worked with the National Food
Laboratory Steering Committee to coordinate and integrate resources to
support key components of the Food Emergency Response Network (FERN);
and participated on an Federal Bureau of Investigation-led team that
conducted a threat assessment of a major export grain elevator.
2007 BUDGET REQUEST
To fund important initiatives and address the Agency's
responsibilities, GIPSA's budget request for fiscal year 2007 is $41.5
million under current law for salaries and expenses and $42.5 million
for our Inspection and Weighing Services. These budgets include
additional requests of $673,000 for employee compensation; $2,870,000
to continue the modernization of our information management systems and
business functions; and $405,000 for international services; and a
decrease of $500,000 for the corn growers initiative. In addition our
request includes a proposal to recover $19.7 million through user fees
to cover the costs of grain standardization activities and Packers and
Stockyards program activities.
An increase of $673,000 for employee compensation will enable GIPSA
to meet its objectives consistent with the priorities established by
the Secretary of Agriculture. This critically important increase is
needed to support and maintain current staffing levels to meet
projected increased demand.
We are requesting an additional $2,870,000 for our IT
modernization initiative. This multi-year project will upgrade
information management systems and modernize our business functions.
This request includes $1.4 million to continue the development of eGov
solutions and $1.5 million for recurring costs associated with the
maintenance of these applications.
We are also requesting an additional $405,000 to establish an
ongoing presence in Asia allowing GIPSA to continue and expand upon our
successful international services and trade activities currently
provided on a temporary basis. GIPSA's hands-on approach of assigning a
temporary duty officer in Asia to facilitate trade of U.S. grain has
provided a positive impact on existing and potential buyers. These
buyers say their concerns related to grain quality are addressed
effectively. Continuing and expanding this program is crucial not only
to increasing U.S. grain exports and reducing market disruptions due to
technical differences in analytical methods and standards, but to
increase satisfaction and loyalty among our current customers in an
extremely competitive marketplace. The U.S. trade dollars saved upon
the resolution of just one grain shipment complaint can far outweigh
the costs associated with maintaining a GIPSA presence in Asia.
Part of our appropriation request will be derived from proposed
new user fees. The budget proposes collecting $3.7 million from grain
standardization user fees and $16.0 million from Packers and Stockyards
Program licensing fees after a 3 month start-up period.
CONCLUSION
Mr. Chairman, Members of the Committee, thank you for the
opportunity to share some of the accomplishments made by our dedicated
staff and highlight our future plans to facilitate the marketing of
U.S. agricultural products and to promote fair and competitive trading
practices for the overall benefit of consumers and American
agriculture.
I would be pleased to address any issues or answer any questions
that you may have.
Thank you.
Senator Bennett. Thank you very much. Appreciate the
testimony of all of you.
USER FEES
Dr. Collins, let us talk about user fees. FSIS proposes a
user fee. If this were authorized, what would be the impact on
domestic slaughter capacity and facilities? Would this increase
the price of meat at the supermarket counter? Would it be
absorbed? How would that happen?
Mr. Collins. Mr. Chairman, a user fee is an increase in
processing costs, and the way economics looks at that is that
if slaughter is a competitive industry, that is, it is buying
its inputs from a competitive industry and selling its outputs
in a competitive industry that, over time, the increase in
processing costs will be passed on. It will not be borne by the
processor. It will be passed back in some form to the supplier
of the live animal to the slaughterhouse. It will also be
passed forward to consumers.
Generally, because consumer demand for meat is so
unresponsive to price, most of the processing costs over time
would be passed on to consumers. The user fee that I believe
has been proposed, which is for inspection beyond the regular
8-hour shift, would generate about $105 million in revenue.
That would be small in the context of our meat production;
we produce or we expect to produce in 2006 about 90 billion
pounds of meat in the United States. That would be red meat,
plus poultry. So if you divide that production into $105
million, it turns out to be about one-tenth of one cent effect
on the price of meat if that user fee is passed fully forward
100 percent to the consumers.
So I find it hard to suggest that the fee would have much
effect at all on the meat packing industry, which,
incidentally, is getting a little bit better margins right now
compared to a year ago.
Senator Bennett. Okay. Thank you.
AVIAN INFLUENZA
Let us talk about avian flu. If a widespread depopulation
should occur, what do you think the effect of that would be on
the industry as a whole? I am not predicting that it would
occur----
Mr. Collins. No, you are hypothesizing a widespread
incident in the United States?
Senator Bennett. Right.
Mr. Collins. We have already seen it, of course, in many
countries around the world, which has had some impact on our
exports.
If we had such an outbreak in the United States, there are
a lot of scenarios that could play out. But clearly, the effect
is going to be focused in two areas--the exports of poultry
products, including broilers, turkeys, and eggs, and in the
domestic demand for those products with secondary effects on
feed markets.
I think the impact is going to depend very much on the size
of the outbreak, where the outbreak occurs, whether it is in
major or minor producing States. It is also going to depend on
the effectiveness of APHIS in eradicating the outbreak. So the
economic effects will depend on those factors.
But, of course, we would immediately lose some exports. It
would be incumbent upon Dr. Lambert and Dr. Penn to work with
other countries to ensure that any suspension of imports by
those countries would be quickly regionalized just to those
States where the outbreak occurs. If that is the case, then we
might be able to reduce, fairly quickly, the effect on our
exports.
Regarding domestic demand, the United States has been
incredibly resilient in the face of any kind of animal disease
for many, many years. You can go back to the 1983-1984 high
pathogenic avian influenza (HPAI) outbreak in Pennsylvania and
the eastern States, and poultry consumption actually went up
that year. We have had other high-path incidents, such as Texas
in 2004 with no effect on poultry consumption.
There could possibly be some small effect because of the
front-page news that Avian influenza (AI) has had for so long.
But I think, again, effective eradication and depopulation
would limit any domestic consumer effect.
You know, we use as a rule of thumb, if we were to lose 10
percent of our exports, we say that would probably reduce
poultry prices by about 3 percent, which on a $23 billion
industry for broilers would be about $700 million.
So there are any number of scenarios that you can play out
here, but I think that on the domestic side, it ought to be
manageable. And I think with good work by APHIS and our trade
experts, we can limit the damage on the export side.
Senator Bennett. Thank you. That kind of analysis is
helpful in a world that is filled with hype about all of these
various issues.
BOVINE SPONGIFORM ENCEPHALOPATHY
Dr. Lambert, let me swing back to you now, as long as we
are talking about these kinds of problems, and have you tell us
what happened in Japan when you were over there. And they have
shut their market down again because of a single cow with BSE.
And you have just returned. You are quoted extensively, I
hope accurately. But having been in public life now, I know
that is not always the case. So tell us, briefly, what you
found and what you see with respect to our possibility of
reopening the export market for beef in Japan.
Mr. Lambert. Thanks, Mr. Chairman.
The technical team that went to Japan consisted of
representatives from APHIS and AMS and MRP, but also the Food
Safety and Inspection Service and the Foreign Agricultural
Service. And we were there after the finding of this one cow
that was not consistent with Japanese criteria in January. The
Japanese government did shut off all imports or suspended all
imports of U.S. product.
The Secretary promised a thorough and extensive
investigation into that incident. We have completed that
investigation and submitted a 475-page report. After that,
there were follow-up questions to which we responded. Then, in
spite of those efforts, there were continued gaps in the
understanding of officials in Japan about how this incident
occurred and the measures that we were going to put into place
to assure that we can at least minimize, to the extent humanly
possible and hopefully prevent another incident like this from
happening.
So the team was there primarily to address these gaps in
understanding. I feel that we were successful in doing that. We
have both identified the next steps that our governments will
take.
From the USDA side, we will provide a checklist of all the
new measures that the Secretary indicated and that were
indicated in the report and that we agreed to during our
discussions these last couple of days. We will provide a
checklist of that to the Japanese government and get
concurrence that these are the changes that processing plants
need to make in order to resume trade.
Once that happens, FSIS and AMS will re-audit the plants
that are eligible to export to Japan with an eye toward getting
Japan's technical people into the plants to do follow-up
verification audits and verify, in fact, that we have made the
changes we said we would, and re-establish trade.
Senator Bennett. Do you have any kind of guess as to the
timetable?
Mr. Lambert. These timelines are always a crap shoot. We
have committed that we will respond just as fast as we can with
the checklist. Once that takes place, we will have people in
the plants and perform the verification audits just as fast as
we can. That probably will take in the neighborhood of 10 days
to 2 weeks. The next challenge will be to get the audit teams
from Japan onsite to conduct the verification visit.
We are optimistic, but in these types of situations,
unanswered questions continue to arise. I should mention, too,
that while we are doing the audits, the Japanese government
will begin communication and outreach with their consumers to
explain the changes that have taken place and to help reassure
Japanese consumers of the safety and wholesomeness of the
product as we move forward to reopening trade.
Senator Bennett. Good. Thank you very much.
PUBLIC LAW 480 TITLES I AND II
Dr. Penn, the fiscal 2007 request provides no funding for
Public Law 480, Title I. But it does provide an increase of $80
million for Title II. Do you want to talk about that?
Mr. Penn. Yes, Mr. Chairman, thank you for the question.
We have, for the first time ever, not asked for funding for
Title I because, as I indicated in my statement, it has been
our experience that the use of that program has dwindled away.
In the last fiscal year, we only had two government-to-
government concessional programs operating. And so, various
countries are using that program less and less.
Senator Bennett. Just for information, which two countries?
Mr. Penn. One in Latin America and one elsewhere, but I
can't tell you off the top of my head.
Senator Bennett. Okay. Fine. All right.
Mr. Penn. But we did, as you noted, propose an increase of
$80 million for Title II. So all of the Public Law 480 funding
will be made available through Title II.
More and more of that is used for emergency purposes. We
are seeing a greater need all around the world, and especially
on the African continent, for emergency funding. And so, more
and more of the resources will be devoted to that.
Senator Bennett. Okay. Fine.
Senator Kohl, I will come back later on. But let us hear
from you. Thank you.
SPECIALTY MARKETS
Senator Kohl. Dr. Lambert, at one of our hearings last
year, I asked about opportunities for small farmers who are
seeking niche or specialty markets. The response I got, talked
about credit programs that are available and a number of grant
programs to help with the value-added product development.
Both things help, but I think there are a lot of
opportunities out there for men and women who are creative,
willing to work hard as independent business owners, and don't
want to have their livelihoods controlled by some large mega
grain or livestock company.
This past November, USDA proposed a rule change to allow
China to export processed poultry products back into the United
States. It seems to me that if the department could find a way
to help Chinese poultry make their way back into the United
States, they should push as hard or harder to help our own
farmers develop niche or specialty markets.
So can you point to any USDA actions taken recently to help
small producers?
Mr. Lambert. Well, we have a number of programs within MRP
that work with small producers. Among these are the process
verified and organic programs. There are ways that producers
can verify that they have a unique or specialty product to
market in niche or specialty markets.
The organics program is rapidly growing. One of the budget
requests we have this year is for an additional $1 million for
the organics program based solely on the expanding demand for
organic products. So there are a number of programs where we
work with small and mid-sized farmers.
We also have the farmers markets that allow individual
producers to market their produce and goods directly to
consumers, and that has been a growing and very successful
program.
With respect to the processed poultry from China,
basically, that is for only United States or Canadian product,
or product that is eligible for export to the United States to
be processed or value-added in China and then re-exported to
the United States. But, as I say, we do have a number of
programs that support specialty crops, including block grant
programs for specialty crop producers that facilitate niche
marketing both by small and mid-sized producers.
Senator Kohl. On these farmers markets, last year we
provided funds for the program to promote farmers markets. But
they are not included in your budget this year. Have I missed
something?
Mr. Lambert. The 2007 budget includes $1 million that
provides for block grants of up to $75,000 per farmers market
to do outreach and promote those activities. That is included
in the 2007 budget.
ALTERNATIVE FUELS
Senator Kohl. Thank you.
Dr. Collins, over the past several years, there has been a
lot of talk about alternative fuels. The President's State of
the Union address increased interest in this subject.
As an economist, do you believe that the development of
alternative fuels is good for our country and, in particular,
is it good for rural America? Can you describe how the market's
regulations and technology have changed over the recent years
and have made alternative fuels more or less attractive?
Mr. Collins. Certainly, Senator Kohl.
Yes, I think we are in the midst right now of quite a
transformation in thinking about alternative fuels. I can
remember when I first started working at the department, we
actually had our energy office being an opponent of ethanol. We
were worried about creating a subsidy-dependent commodity with
an uncertain value.
But I think as we have gone through the 1990s, and
particularly in this decade, there has been a substantial
change. This substantial change relates to, of course, what
happened on 9/11, the concern about energy security, the
concern about diversification of energy supplies.
We have an exploding trade deficit. One third of our trade
deficit is oil imports. We have also had energy prices soar to
unprecedented levels. That has changed the backdrop in which
alternative fuels now are looked.
In addition to that, we have the environmental side of
alternative fuels. Today, people are valuing alternative fuels
not just for their BTU content in the gasoline tank, but for
their environmental value, for their rural development,
employment creation opportunities, for their trade deficit
reduction, for their energy security.
I would say that many people are valuing it that way. The
Wall Street Journal aside, of course--if you saw their
editorial this week--which seems to miss most of those points.
I would say also a point that you made is the development
of new technologies. You could probably go back into the 1980s
and find ethanol being produced at a cost of over $2 a gallon.
It fell by the early 2000s to about 95 cents a gallon as its
cost of production. It is now probably about $1.10 a gallon,
mainly because of the higher price of energy, as a lot of
natural gas is used in ethanol production.
But I think this combination of new technologies and, of
course, the President talked about down the road by 2012,
hopefully, the commercialization of cellulosic conversion to
ethanol, this advent of all of these new technologies, combined
with the environment in which we find ourselves with high fuel
costs, have really changed the thinking about ethanol.
And of course, you are seeing that in the explosion of
production across rural America. And yes, I do believe that
this is an enormously important opportunity for rural economic
development.
If you look at the value of our oil imports, they exceed
the total net cash income of agriculture. So even capturing a
small portion of that for agriculture could be very important
to farm income and rural economic growth.
COMMODITY SUPPLEMENTAL FOOD PROGRAM (CSFP)
Senator Kohl. Thank you.
Mr. Bost, when Secretary Johanns was here, we briefly
discussed elimination of the Commodity Supplemental Food
Program, CSFP, which, as you know, provides food boxes to low-
income elderly individuals and also some women, infants, and
children.
He stated several reasons why USDA believes this program is
no longer necessary, including the fact that seniors can move
to food stamps, there simply isn't enough money, and that the
program only operates in a limited number of States.
Is CSFP the only nutrition program that operates in a
limited number of States?
Mr. Bost. Senator Kohl, in this particular program, it is
not only in a limited number of States, in those States, it is
not even State wide. Right now, it is in 32 States, 2 Indian
reservations, and the District of Columbia.
As I said in my opening statement, when you put together a
budget, you are not able to do everything that you would like
to do. We feel strongly that many of the people currently
served in this specific program would be better served in other
nutrition assistance programs that essentially are in existence
across the Nation--for example, the WIC Program and, for the
elderly participants, the Food Stamp Program.
Senator Kohl. Well, a little bit of the math on that. The
CSFP program was last year funded at $109 million, and it
served over 420,000 people, nearly 90 percent of whom were
seniors. The increase in food stamps in the budget to take care
of these people the USDA says it plans to switch from CSFP is
only $50 million, with an additional $18 million in transition
benefits.
So it seems to me that the funding levels show a
discrepancy, and how would you explain that people are not
going to lose benefits under this plan?
Mr. Bost. Senator Kohl, as we are transitioning the elderly
eligible participants in this program, we are providing them
with $20 a month until they do participate in the Food Stamp
Program. However, it is true given the income levels of some of
the CSFP participants, they probably would not be eligible to
participate in the Food Stamp Program.
One final point, the average amount of money that we
believe many of the elderly would be eligible to receive in the
Food Stamp Program would be approximately $63. So, they would
actually get more. Some of them--not all of them--would
actually get a higher benefit under the Food Stamp Program as
opposed to the value of their benefit as a participant in CSFP.
Of course not all of the elderly are eligible for the
average Food Stamp benefit, which currently is about $63. The
food box that they get in CSFP is delivered. They do not have
to go get it. There is some belief that many of these seniors
will not participate in the Food Stamp Program for this reason.
But we believe that, working with our partners, building in
transition, we will be able to pick up and offer these services
to a significant number of persons.
The other point that I want to make, finally, is for those
that are not eligible for either the Food Stamp or WIC Program,
there is another nutrition program we have available in which
they will probably be able to participate, which is our TEFAP
program.
Senator Kohl. So you are saying that in many States, like
my own State, those people who are receiving the benefits of
this program won't be disadvantaged?
Mr. Bost. Some of them may be, but not all of them. That is
why it is a very difficult budget decision for us to make
because some may be adversely affected.
But we are going to do our best to ensure that those who
are eligible to participate in our nutrition assistance
programs, are picked up. And for those that are not eligible
they will be provide with other resources like the TEFAP
program.
MEAT AND POULTRY IMPORT REQUIREMENTS
Senator Kohl. One question for Dr. Raymond. We have
recently heard reports that FSIS is working to set up a trial
program during which some Canadian plants will be able to
export beef into the United States without requiring daily
inspections, which is something that we require in this
country.
I know that most recently this trial has been put off until
at least July, but apparently, it is not off the table. One of
our most important safety requirements for bringing food into
this country is that the exporting country has to have the
equivalent food safety requirements as we do, and this project
appears to throw that out the window.
Are you considering lessening the requirements on our food
plants at home for less than daily inspections? Do you think
this would be wise, especially when certain countries already
have questions about our food safety program? Would you talk
about this trial program that you have on the table?
Dr. Raymond. Certainly, Senator Kohl.
First of all, to clarify, the trial program has not been
established as exactly what it will look like. One of the
possibilities is that the Canadian government would do daily
inspection for 3 months in 50 plants that export to the United
States and do intensified laboratory testing for food-borne
pathogens. Then they would do 3 months of less than daily
inspection and continue with the enhanced laboratory testing so
they could compare food product contamination rates for daily
inspection and for less than daily inspection.
When that product is tested, that product would not be
shipped across the border to the United States until it tested
negative for food-borne pathogens. That is just one proposal.
That is not necessarily the proposal that will take place.
First of all, they may not do any project. They may not do
any test for equivalency of less than daily. That is their
choice.
But the point right now is that they cannot export product
to America unless they have daily inspection in those plants,
which they are now doing. All of the facilities that export to
the United States have daily inspection.
If they want to try to show us that less than daily
inspection is equivalent in safety, they have to devise a
project that would satisfy our requirements to evaluate that.
We are still in negotiations with them on that issue.
I hope that clarifies that issue. They have been doing
daily inspection since August 22, 2005.
Senator Kohl. Okay. Well, I understand there is a trial
program under consideration in Australia to export beef to
America from plants that pay for their own inspectors,
something that we don't allow in this country. As you know, we
pay for meat inspectors, believing Government employment is the
best way to make sure that our meat stays safe.
Are we thinking about a program with Australia that would
allow them to export beef from companies that employ their own
inspectors?
Dr. Raymond. At this time, Senator Kohl, there are no
Australian establishments certified to export to the United
States that are using their meat safety enhancement program.
Senator Kohl. So there is really nothing to that
consideration of a trial program to allow them to export meat?
Dr. Raymond. They have had one plant that has expressed
interest, and at this point, that plant has not been certified
for export to the United States.
Senator Kohl. Thank you.
Mr. Chairman.
Senator Bennett. Thank you very much.
GRAZING LAND CONSERVATION INITIATIVE
Mr. Rey, let us talk about invasive species. They affect
forage quality and range land health and wildlife and watershed
function and all of those things.
And in fiscal 2006, we provided $4.1 million to control and
manage invasive species through the Grazing Land Conservation
Initiative. And these funds were leveraged with private
matching, and the administration eliminated funding for Grazing
Land Conservation Initiative.
I have a series of questions on this, but just talk about
that generally and let us see what your thinking is with
respect to this problem.
Mr. Rey. Our thinking generally is that we are trying to
consolidate and better organize a variety of the conservation
programs. The Grazing Land Conservation Initiative is one that
fulfills functions that are already being fulfilled under
Conservation Technical Assistance and under the Environmental
Quality Incentive Program (EQIP).
Much of the work that would have been done was being done
under the Grazing Land Conservation Initiative. In our 2007
budget that work will be done under the other two programs, and
will include work on invasive species.
We are also investing $2 million in our 2007 budget request
in the cooperative conservation partnership initiatives to deal
specifically with invasive species, and that issue, invasives,
will be one of the top priorities in that area and in the EQIP
area as well.
Senator Bennett. Have you had any response or comment from
the various stakeholders with the elimination of the funding
for GLCI?
Mr. Rey. Not so far. I expect as the budget process unfolds
and as we talk about that, we will hear from them. Particularly
where GLCI earmarks were directed toward specific States and
locales, we are going to have to lift a burden of proof to
demonstrate that the work will still be done if those earmarks
are eliminated.
AIR AND WATER QUALITY ISSUES
Senator Bennett. Okay. Let us see, Mr. Rey, Conservation
Technical Assistance. Senator Kohl and I made this a priority
last year. We provided $12 million, a major increase in light
of the budget that we faced last year. There is no similar
request for the 2007 budget. Why did the budget request not ask
for funding to continue the progress that we started last year?
Mr. Rey. Well, the funding request for Conservation
Technical Assistance is a total of $634.3 million, which is a
fairly significant budget line item.
Senator Bennett. No. I am sorry. I am talking about
specific money to meet water quality and air quality
requirements. I apologize. I didn't pose the question properly.
Mr. Rey. Sorry. We have established as a priority for the
EQIP program and for the General Conservation Title programs at
large to work on air and water quality issues, and we are
making substantial progress in those areas. So I think what you
are going to see in the mix of program priorities from both
EQIP and Conservation Technical Assistance is a substantial
amount of work directed toward water quality and air quality,
particularly in addressing the air and water quality in packs
of confined animal feeding operations.
Senator Bennett. So you are saying that the amount we very
specifically focused on this will be taken care of in the
overall, and we don't need to worry about it?
Mr. Rey. Correct. In 2006, we spent the amount that you
earmarked for air and water quality, but we also spent a
substantially greater amount of that as part of the overall
EQIP and Conservation Technical Assistance budgets to deal with
air and water quality issues.
Senator Bennett. So you are telling us the emphasis is
still there?
Mr. Rey. Correct.
Senator Bennett. All right. I am sure we will watch that
and appreciate that.
I have some additional questions, but I think we will
submit those for the record.
Okay. Senator Kohl.
FARM SUBSIDIES
Senator Kohl. Thank you, Mr. Chairman.
I would like to address this to Dr. Penn and Dr. Collins.
There was an article in the Wall Street Journal recently about
the future of farm subsidies. The article discussed how
subsidies can promote overproduction and lead to other
problems, including issues with the World Trade Organization.
It also noted that American citizens, both rural and urban,
are becoming concerned about the way traditional farm programs
affect farmers in poor African countries and elsewhere, as well
as the effect they have on our environment here.
These issues, as you know better than I, are very complex.
There are several different ways to estimate this, but I
understand that in the past 3 years, farm payments averaged
approximately 25 percent of net farm income, which is more
generous than some countries and less generous than others.
This is an issue that could consume an entire hearing all
by itself, but while we have you here, I am interested in your
views. Can you talk about this shift in public opinion? Can you
talk about the WTO?
Can you talk about traditional farm programs, if they were
to decrease or to be eliminated? What thoughts do you have on
the best way to protect not only our farmers, but our rural
America?
For after all, all this money that the farmers get is spent
in rural America in ways that keep rural America alive. So
where do you see this whole issue going in terms of its impact
on our rural economy?
WTO
Mr. Penn. Senator Kohl, let me begin by discussing the WTO
aspects of the question. As you indicated, it is a very broad
question and one that we could spend a lot of time discussing.
But let me say before I turn to Dr. Collins that in recent
times, there has been a much greater consideration given to the
impact of our domestic farm programs on our trading partners.
And I think that this has been around since the Uruguay round
agricultural agreement was concluded in the mid 1990s.
This was the first multilateral or international agreement
to include food and agriculture in a very substantive way. So
we have been much more cognizant of this connection between the
trade impacts and the domestic farm program impacts since that
time.
Now this really came to a head quite recently when some of
our programs were challenged in the WTO. Brazil and some other
countries launched the so-called ``cotton case'' in which they
singled out cotton and other various programs and challenged
those for the very reasons that you indicate. They said that
the programs were stimulating additional production here at
home. We then exported that production into the world market.
That extra production had a price-depressing effect.
Now we certainly think that that effect is greatly
overstated, but nonetheless, Brazil prevailed in that WTO
challenge, and they prevailed on the appeal. So that has now
caused us to take into account the effects of our programs on
others, or the extent of the trade distortions that our
programs may have.
So as we approach the 2007 Farm Bill, as we approach what
we hope to be the successful conclusion of the Doha trade
negotiations, we are now much more mindful of the form in which
we provide support to our producers than perhaps we have been
in the past.
The WTO has established various color boxes. The amber box,
which is the most trade distorting form of domestic support;
the blue box, which is less trade distorting; and the green
box, which is non- or minimally trade distorting.
So we are having to give more and more thought about
switching our support for our farmers from amber box to blue
box to green box, so that we can continue to provide support
for domestic agriculture, but do it in a way that doesn't
negatively or adversely affect our trading partners around the
world.
That is sort of the trade aspects. But as you know, Dr.
Collins has spent most of his career studying all of the other
aspects of your question. So I will turn to him.
Mr. Collins. That is very kind of a senior author of a
multiple edition agricultural policy book to hand that off to
me.
PUBLIC OPINION ON AGRICULTURAL POLICY
Mr. Collins. Mr. Kohl, your question deserves a
comprehensive and thoughtful answer, and Dr. Penn mentioned the
trade implications of our programs and how that can affect
future agricultural policy.
One of the things you asked about was how public opinion
has shifted, which is part of what the Wall Street Journal
article was about. I guess my feeling is that the great
majority of Americans really don't know much about agricultural
policy, and I think they are very positive about agriculture
and about farmers. So I don't sense a great shift among most
people, urban residents, for example.
However, within agriculture in rural areas, I think there
is a shift, and I think part of it reflects a broader and
deeper understanding about farm programs. Some of that has come
because of the international scrutiny of our programs--WTO
challenges, the loss of the cotton case, for example, the
understanding that programs are ``amber box'' in many cases and
have resource allocation effects.
Also there has been a lot of discussion about the effects
of farm programs on land values, the equity of the payments
across commodities, across regions, and across size of
producers. Much data has been presented in recent years about
those things. And so, I think there is a bigger and deeper
understanding about some of the consequences of our current
structure of programs than perhaps we have had in the past, and
that is starting to show in the public discourse.
As you probably saw yesterday, the department released 41
short papers, which are the summaries of what the department
heard at the 52 Farm Bill forums that were held by the
Secretary and people at this table. If you look through some of
the comments, you will find that people are questioning.
Well, you mentioned 25 percent of net farm income or net
cash income coming from Government payments. You know, this
year, it is going to be about 30 percent in 2006. That is
roughly $20 billion the last couple of years.
People are saying, well, $20 billion a year is a lot of
money and are there other ways that that money can be used to
continue to promote rural well-being, address some of the
problems with the current programs, and also deal with some of
the new emerging issues that people want dealt with.
You already talked about promoting niche opportunities for
small producers in rural America. Maybe more could be done
there. People want to do more in energy. We had an energy title
in the last Farm Bill. Very little money went into that energy
title. Maybe money is not the answer for energy, but that is
something to think about.
There is the question of specialty crops. I have been
struck by the fact that 20 years ago, the cash receipts that
farmers earned from specialty crops was half of what was earned
from program crops. And this year, it is going to be equal to
what is earned from program crops. So we have had this
incredible growth in specialty crops in the United States, and
specialty crops are not really party to that $20 billion.
So I think there is a discussion going on within
agriculture in rural areas about farm programs and about what
is the best way to deal with the problems that farmers face,
which certainly are there, but also deal with the needs of
rural areas.
And of course, you asked, how we thought that might come
out, and I guess my answer to that would be, well, we will wait
and see how that comes out in the 2007 Farm Bill. But that is
the landscape behind the debate that is emerging, and I do
think that there has been some shifting of opinion within rural
areas and agriculture.
You even see that in some of the reports that some of the
farm groups are putting out. The National Corn Growers and the
American Farm Bureau Federation have put out some very
thoughtful pieces about where we should go in the long run with
our agricultural policy and it is a little bit different than
you might have heard 10 or 15 years ago.
Senator Kohl. Do you anticipate that there will be some
very detailed discussion of this whole issue surrounding the
Farm Bill in 2007 and maybe some significant changes?
Mr. Collins. I guarantee you there will be detailed
discussion. As to the significant changes, my forecasting
ability there has failed me in the past. So I am not sure. But
there is always that potential.
Senator Kohl. But isn't it true in the sense that if we
spend the money in different ways, the direct payments to
farmers, as they go down, will have a direct impact on farming?
I mean, if we are spending $20 billion a year----
Mr. Collins. Right. Right.
Senator Kohl. And we take that money and spend a portion of
it or a large amount of it in other ways to impact in a
positive way rural America, but the money doesn't go through
the farmer, what will happen to the farmer?
Mr. Collins. Well, it may or may not. Look at the situation
now. The $20 billion, most of that goes to a small set of
farmers.
Senator Kohl. That is true.
Mr. Collins. Most of that goes to wheat, corn, cotton,
rice, soybeans, and so on. It is not going to another big part
of agriculture. So you could already argue that there is some
relative disadvantage in place right now with the current
structure.
So if you start to reapportion things, change things
around, it is true that some farmers would stand to lose. Other
farmers would stand to gain.
And there also may be alternative ways that those producers
who would lose their direct payments or their counter-cyclical
payments or their marketing loan benefits could pick up those
benefits through other programs--other programs that exist now,
such as expanded conservation programs, or other programs yet
to be designed in the 2007 Farm Bill.
So I don't think you can conclude that automatically every
producer is going to lose. They are not. There is going to be a
distribution of losers and of gainers, and always part of the
dilemma in changing farm policy is how to deal with anybody
that is perceived as a loser.
We have figured out how to do that in some cases. We had a
peanut buyout program. We had a tobacco buyout program. Who
knows? Maybe there will be new ways that we can think about how
we can transition from one structure to another structure and
minimize the losers.
Senator Kohl. Thank you very much, gentlemen.
Mr. Chairman.
ADDITIONAL SUBMITTED STATEMENTS
Senator Bennett. The subcommittee has received statements
from Rural Development and Research, Education and Economics
which will be placed in the record.
[The statements follow:]
Prepared Statement of Thomas C. Dorr, Under Secretary, Rural
Development
Mr. Chairman, members of the Subcommittee, I appreciate this
opportunity to appear before you today to present the President's
fiscal year 2007 Budget request for USDA Rural Development.
With me today are Jim Andrew, Administrator of our Rural Utilities
Programs; Russell Davis, Administrator of our Rural Housing and
Community Facilities Programs, and Jack Gleason, Acting Administrator
of our Rural Business and Cooperative Programs.
On behalf of all of us, let me say that it is indeed a privilege
for us to be here today representing over 6,800 dedicated men and women
of USDA Rural Development. They are spread across every State and are
your neighbors. They do an outstanding job.
And if I may, I would like to take just a moment to pay a special
tribute to the extraordinary contributions so many of them made this
past year under very difficult circumstances in the wake of the 2005
hurricanes. This is not the place for an extended discussion, but I do
want to say that amidst all the controversies, a great deal of good
work by good people has gone unremarked.
I have visited the Gulf Coast repeatedly since the hurricanes, and
I have been inspired by the resiliency, commitment, and energy of
hundreds of USDA Rural Development people in the affected areas. Some
of them, in fact, had lost their own homes--but in those first days
after landfall, all of them were working around the clock helping to
provide emergency shelter, financial support, and transitional housing
to evacuees. And they are hard at work now helping with the rebuilding
of homes and businesses across the region.
We are a relatively small agency and, in the context of the
hurricanes, a relatively small part of a much larger story. But this
was truly a case where we punched above our weight. I am tremendously
proud of the work our people did, and not just those in Louisiana,
Mississippi, Alabama, and Texas, but also their colleagues around the
country.
VISION
Mr. Chairman, I am both honored and humbled by the opportunity
President Bush has given me to serve as Under Secretary for Rural
Development. I am committed to the future of rural America. My home is
outside Marcus, Iowa, a metropolis of about 1,100. I am a farmer. I
treasure the rural way of life and understand the pressures faced by
rural communities in our rapidly urbanizing society. But I also believe
that the traditions and values of rural America remain a vital part of
our national heritage.
I believe also that the future of rural America is bright.
Certainly there are challenges; there always are. But rural communities
enjoy many assets as well: the quality of life, a clean environment,
peace and quiet, livable small towns, a lower cost of living, strong
communities, and traditional values. These are communities worth
preserving, and they have a future well worth building.
The mission of USDA Rural Development is to provide leadership,
infrastructure, venture capital, and technical support to enable rural
communities to prosper in a dynamic new environment defined by
globalization, the Internet revolution, and the rise of new
technologies, products, and markets.
In this effort, we begin with the recognition that rural America is
extraordinarily diverse. It includes some of the fastest growing
communities in the Nation, areas that are suffering from long-term
economic and population decline, and everything in between. One size
does not fit all.
We understand as well that sustainable development must be market
driven, not program dependent. And finally, we recognize that our role
is to encourage and support local initiatives, both public and private.
We know that our success depends on our ability to attract both private
and other public partners; our success, indeed, is measured primarily
by their success.
I believe in this mission. And I believe firmly that rural America
today is more competitive . . . more attractive as a place to live,
work, and do business . . . and better positioned for self-sustaining
growth . . . than has been the case for many years.
FISCAL YEAR 2007 BUDGET REQUEST
The President's fiscal year 2007 Budget proposes $2.1 billion in
budget authority and a program level of $13.7 billion for rural
housing, community facilities, infrastructure, and economic
development. Under the USDA Rural Development programs, each Federal
dollar supports 6.5 dollars of investments in rural America. We are
also able to leverage our funds with those of the private sector, as
well as create partnerships with State, local, and tribal governments,
community development organizations, and for-profit and not-for-profit
companies.
In a challenging budget environment, this is an important means of
maximizing the return on scarce budget dollars. It should be
emphasized, however, that this emphasis on leveraging is a sound policy
choice quite independent of current budget constraints. Indeed, the
evolution of program emphasis within USDA Rural Development has for
some years been away from grants and direct loans and toward a greater
reliance on loan guarantees. This has allowed us to serve more
individuals, businesses, and communities for any given level of budget
authority. It also reinforces our strategic objective of fostering
sustainable development based, on market orientation and private
investment.
I would like to touch briefly on some highlights of our fiscal year
2007 request.
RURAL UTILITIES PROGRAMS
USDA Rural Development provides financing for electric,
telecommunications, and water and wastewater services that enhance the
quality of life and provide the foundation for economic development in
rural areas. For fiscal year 2007, the President's Budget proposes $553
million in budget authority to support a program level of $6.3 billion
for rural utilities programs.
Of this total, $3.8 billion is for the rural electric program. With
the support of the President and Congress over the last several years,
we have eliminated the backlog in electric program applications and
believe that the funds proposed for fiscal year 2007 will be sufficient
to meet the demand.
In addition, the President's budget proposes $1.414 billion in
loans and grants for rural water and wastewater projects. To enhance
the ability of low-income communities to finance vital water and
wastewater improvements, we propose to change the calculation of the
``poverty'' interest rate for this program from the current fixed 4.5
percent to an adjustable rate set at 60 percent of the market rate.
This change is reflected in the higher subsidy rate projected in fiscal
year 2007 for Water and Wastewater Program Direct Loans. We also
continue to believe that in the current low interest rate environment,
rural communities can afford to finance a higher share of project
costs, and we therefore propose to shift the loan-grant ratio to an
approximate 75-25 percent ratio.
The President's budget proposes $690 million in telecommunications
loans and the investment of $356 million in loans to accelerate the
deployment of broadband to rural communities. Broadband is fast
becoming an essential tool for businesses, both large and small, and we
are acutely aware that broadband deployment continues to lag in rural
areas. Ensuring broadband access is essential to achieving a dynamic
rural economy. The budget request is expected to be sufficient to meet
the demand for the next year. This represents a reduction from the
nominal fiscal year 2006 program level of $495 million, but as this
Subcommittee knows, we have to date been unable to obligate all the
broadband loan funds that Congress has made available to us. The volume
of viable applications that either we or the Congress anticipated has
simply not materialized.
It is clear, therefore, that the rural broadband deployment model
must be improved. This has been a top priority since my confirmation
last summer. We are now engaged in a thorough review to identify
obstacles to borrower participation. In the meantime, we look forward
to working with the Congress, the telecommunications industry, and
rural stakeholders to accelerate deployment of this vital technology.
In addition, the President's budget includes $24.8 million for the
Distance Learning and Telemedicine (DLT) Grant Program, which enables
rural communities to enhance their educational options and access the
resources of big city medical centers via the Internet. This request
maintains the fiscal year 2006 program level for DLT Grant Program.
RURAL HOUSING AND COMMUNITY FACILITIES PROGRAMS
Safe, modern, affordable housing is essential to healthy
communities. USDA Rural Development works to extend the benefits of
homeownership to low- and moderate-income Americans and to historically
disadvantaged communities. We finance affordable rental housing and
essential repairs for low- and very-low income homeowners. We also
assist rural communities in providing quality health care, police and
fire services, day care, educational and recreational facilities, and
other essential community services.
The fiscal year 2007 budget request for rural housing and community
facilities exceeds $6.27 billion. This includes an increase in funding
for both direct and guaranteed homeownership loans, to $1.2 billion and
$3.56 billion, respectively. We anticipate that this level of funding
will provide homeownership opportunities for over 40,000 rural
families. In order to meet this goal, we propose raising the guarantee
fee from 2 percent to 3 percent. This nominal increase will provide an
additional $2.86 billion in single family guaranteed loans.
For multi-family housing, the budget proposes shifting funding from
direct to guaranteed lending in order to increase our leveraging and
serve more residents at a lower cost. A total of $198 million--double
the fiscal year 2006 program level for guaranteed lending--is requested
for this purpose.
We also propose $486 million for rental assistance, a figure which
reflects a shift from 4 to 2 year contracts. We believe it is
unnecessary to renew contracts for 4 years especially while
revitalization is underway, and the Administration remains committed to
renewing contracts as needed. However, 2 years is the minimum contract
term the program should have to operate efficiently from year to year.
In addition, the budget proposes $74 million to fund our multi-
family housing revitalization initiative. As this Subcommittee knows,
the multi-family housing portfolio faces longstanding issues of
deferred maintenance. This is compounded by the threat of prepayment by
the owners of some complexes who may wish to exit the program, leading
to the displacement of significant numbers of elderly and low-income
tenants. The $74 million will fund the voucher program to help
displaced tenants from USDA financed multifamily housing properties
where the owner has chosen to pre-pay the Rural Development loan and
withdraw the property from the program. The $74 million is proposed in
the Budget solely for funding the anticipated need for the voucher
program. Funding debt restructuring without the proper legislative
authorizations in place would be premature. However, in order to allow
for balancing of needs in anticipation of the new authorization
passing, the appropriations language does allow for the funds to be
used for this purpose if debt restructuring authorization language is
enacted. While modest in budgetary terms, this is a very significant
investment in the long-term stabilization and revitalization of the
rural rental housing portfolio.
Finally, the budget proposes to increase the program levels for the
Farm Labor and Self Help Housing Programs to $55 million and $38
million, respectively. It continues Community Facilities Loans and
Grants at their fiscal year 2006 levels.
RURAL BUSINESS AND COOPERATIVE PROGRAMS
The third leg of the Rural Development stool is business
development and job creation. The future of rural communities depends
on their ability to attract and regain young families. A diversified,
growing rural business sector is essential to offering opportunity to
young adults and a future to growing families.
To support these goals, the President's budget for fiscal year 2007
requests $103 million in budget authority to support a program level of
$1.138 billion for our Rural Business and Cooperative Programs.
Our request for fiscal year 2007 is--as it was last year--
consistent with the Strengthening American Communities Initiative,
which called for a consolidation of several economic development
programs within the Department of Commerce. We are confident of our
ability to partner with the Department of Commerce to ensure that rural
America participates fully in this broader funding pool.
Of the programs remaining in USDA Rural Development, the Business
and Industry Guaranteed Loan Program (B&I) accounts for approximately
42 percent of proposed budget authority and 87 percent of total program
level for fiscal year 2007. We will also continue to provide technical
assistance, development, and research support for rural cooperatives,
targeted investment in alternative energy and energy conservation, and
support for intermediary lending institutions through a variety of
smaller programs. We estimate that total business program investment in
fiscal year 2007 will create or save over 56,000 jobs.
CLOSING
In closing, Mr. Chairman, I want to emphasize that the bottom line
for USDA Rural Development is not budget numbers; it is water lines
laid, families able to afford a new home, new businesses and jobs
created or saved, and rural communities strengthened by what we do. It
is a privilege to work with the members of this Subcommittee to advance
these objectives despite the stringent budget environment we face
today. This concludes my formal statement and I will be glad to answer
any questions you may have.
______
Prepared Statement of Jackie J. Gleason, Acting Administrator, Rural
Business-Cooperative Service
Mr. Chairman and members of the Subcommittee, I am pleased to
present the Administration's fiscal year 2007 Budget for the Rural
Development's rural business and cooperative programs.
Mr. Chairman, the programs and services of Rural Development, in
partnership with other public and private sector businesses, continue
to improve the economic climate of rural areas through the creation or
preservation of sustainable business opportunities and jobs. Rural
Development continues to invest in rural America, especially in the
under-served rural areas and populations. Rural Development programs
help close the gap in opportunity for these under-served rural areas
and populations, moving them toward improved economic growth by
providing capital, technology and technical assistance. The $103
million requested in budget authority for Rural Business-Cooperative
Service programs will support $1.138 billion in direct and guaranteed
loans and grants and will assist in creating or saving over 56,000 jobs
and providing financial assistance to more than 1,200 small businesses.
The cooperative form of organizational governance continues to be a
cornerstone of business development in our rural communities, whether
in the traditional form that brings day care services to a rural
community or today's new generation ethanol cooperatives that lessen
our dependence on foreign oil. From the large agricultural marketing
cooperative that brings additional value to its members products, to
the small rural telephone cooperative that brings broadband technology
to its community's businesses and residents, to the elder care
cooperative that brings desperately needed services to our ``greatest
generation,'' cooperative organizations provide our rural residents
with new and exciting job opportunities, enhanced educational and
health care opportunities, and products and services that enable viable
rural communities to compete with their urban and suburban
counterparts.
Rural Development's mission is ``to increase economic opportunity
and improve the quality of life for all Rural Americans.'' Rural
Development's business and cooperative programs successfully carry out
this mission by providing an array of educational, technical
assistance, research, and loan and grant programs to rural Americans.
BUSINESS AND INDUSTRY GUARANTEED LOAN PROGRAM
For the Business and Industry (B&I) Program, the fiscal year 2007
budget includes
$43.16 million in budget authority to support $990 million in
guaranteed loans. We estimate that the funding requested for fiscal
year 2007 will create or save over 23,667 jobs and provide financial
assistance to approximately 554 businesses. The B&I program allows
lenders to better meet the needs of rural businesses. Through the
lender's reduced exposure on guaranteed loans, they are able to meet
the needs of more businesses at rates and terms the businesses can
afford. B&I guaranteed loans may also be used by individual farmers to
purchase cooperative stock in a start-up or existing cooperative
established for value-added processing.
I would like to illustrate how this program partners with a lender.
Desert View Regional Medical Center Holdings, LLC was approved for a
Business and Industry Guaranteed Loan in the amount of $17.5 million.
The funds will be used to construct a 25 bed acute-care surgical
hospital in Pahrump, NV, which currently does not have hospital
services. The facility will include 22 medical beds, 3 birthing suites,
and emergency rooms with 8 treatment bays and trauma unit. The surgery
department will have 2 operating rooms; the imaging department will
include radiology, fluoroscopy, mammography, ultra sound, C/T, and
mobile MRI; and there will be a clinical laboratory, cardiopulmonary,
physical, and occupational therapies. At present, residents of the
Pahrump area must travel approximately 60 miles to Las Vegas for acute
primary hospital care. Approximately $12 million in equity and other
funds will be contributed to the project. In addition to benefiting the
community with a critical access hospital, the new hospital will bring
140 new jobs to the area, which includes 40 doctors and nurses.
I would also like to share with you another example of how this
program partnering with a lender, Comerica Bank, has supported
alternative energy development in rural America. The Snowflake White
Mountain Power, LLC, was approved for a B&I guaranteed loan of $6
million in addition to a Section 9006, Renewable Energy System
Guaranteed Loan of $10 million to build a 20 megawatt biomass
electrical generating plant 17 miles southwest of Snowflake, Arizona.
The raw materials for generation are burnt trees from the Abitibi Paper
Mill which is located adjacent to the proposed plant. About six jobs
will be created directly and 40 jobs from subcontractors. This is a
good example of how two programs within Rural Development were jointly
utilized to purchase the guaranteed loan assistance needed for the
project to be realized.
VALUE-ADDED PRODUCER GRANT PROGRAM
For fiscal year 2007, the budget requests $20.295 million for the
value-added producer grant program, the same as in the previous year.
The Value-Added Producer Grant (VAPG) program encourages independent
agricultural commodity producers to further refine or enhance their
products, thereby increasing their value to end users and increasing
the returns to producers. Grants may be used for planning purposes such
as conducting feasibility analyses or developing business plans, or for
working capital accounts to pay salaries, utilities and other operating
costs. Program revisions were made in fiscal year 2006 that will
increase the number of eligible applicants competing for this
critically important funding, and in support of the President's e-Gov
initiative, administrative processes were refined to enable producers
to complete an electronic application template and submit their
completed applications through Grants.gov.
The successes of the Value-Added program are evident throughout the
country. Alternative crops are two vital words for the survival of
agriculture in today's world. For example, Paulk Vineyards of Wray,
Georgia, is a family-based grower of southern grapes, commonly known as
muscadines. While this alternative crop is used in wines, jellies,
jams, and juice, studies have shown that the product and its by-
products have tremendous health benefits. Paulk Vineyards received a
$126,350 VAPG to develop processes that would turn muscadine seeds into
anti-oxidant powders and a healthy, good-tasting juice. Muscadine seeds
are higher in reseratol antioxidant, ellagic acid, and total
antioxidants than any other fruit analyzed according to several
researchers, including the University of Georgia. When dried, crushed,
and encapsulated, this value-added product can be sold on the market to
biomedical companies, health food stores, natural food stores, and the
public. As a result of being able to develop these new processes with
the value-added grant, the Paulk family is building a new processing
facility for its extract and powder lines which will substantially
increase employment in this rural area.
Since the passage of the 2002 Farm Bill, funding for the
Agricultural Marketing Resource Center (AgMRC) has been set at 5
percent of the funding made available to the other value-added
programs. Therefore, approximately $1.015 million of the $20.295
million budget request will fund the AgMRC's activities. AgMRC is an
electronically based information center that creates processes,
analyzes, and presents information on value-added agriculture. The
center is housed at Iowa State University; however, it has partners at
Kansas State University and the University of California-Davis. The
center provides producers, processors, and other interested parties
with critical information necessary to build successful value-added
businesses.
RURAL COOPERATIVE DEVELOPMENT GRANT PROGRAM
For fiscal year 2007, the budget requests $4.95 million for the
Rural Cooperative Development Grant Program. The Rural Cooperative
Development Grant program provides funds to establish and operate
centers for developing new cooperatives and improving the operations of
existing cooperatives with the primary goal of improving the economic
conditions of rural areas. This program complements our national and
State office technical assistance efforts by increasing outreach and
developing feasibility studies and business plans for new cooperatives,
and assisting existing cooperatives in meeting the demands of today's
ever-changing global economy.
For example, when Cooperative Development Services, Inc. (CDS)
started fielding inquiries to start new food cooperatives, they found
this to be very unique. Not since the 1970s had a major number of new
food cooperatives been developed in the United States. While CDS'
consultants work with over 100 food cooperatives in rural Wisconsin,
Minnesota, and Iowa, assisting with all phases of leadership
development; store growth, and expansion; and operations improvement,
it needed additional financing for the technical assistance necessary
to meet the growing demands of start-up cooperatives. With a Rural
Cooperative Development Grant from USDA's Rural Development, CDS was
able to advise and assist two steering committees as they moved through
the steps of cooperative development, including market research,
feasibility analysis, business planning, equity formation, and, in one
case, the hiring of the cooperative's manager. The results have been an
overwhelming success. Harvest Market Co-op, located in the Village of
Barneveld, opened a grocery store cooperative that has 348 members. The
store is thriving with projections calling for the store to reach
breakeven profitability this year. A second cooperative, Just Foods Co-
op, has already grown in membership to over 1,100. These start-ups
served as the catalyst for CDS to create a national model to guide the
development of food cooperatives across the country. Implemented in
June 2005, the model has been adopted by other cooperative associations
and is expected to grow the number of food cooperatives throughout the
country in the next 10 years from 300 to 500.
GRANTS TO ASSIST MINORITY PRODUCERS
For fiscal year 2007, the budget requests $1.485 million for
funding for cooperatives or associations of cooperatives whose primary
focus is to provide assistance to small, minority producers whose
governing board and/or membership comprise at least 75 percent minority
members. Grants may be used for developing business plans, conducting
feasibility studies, or developing marketing plans for farmers,
ranchers, loggers, agricultural harvesters and fishermen whose gross
annual sales do not exceed $250,000.
COOPERATIVE RESEARCH AGREEMENTS
For fiscal year 2007, the budget requests $495,000 for cooperative
research agreements to encourage the study of those issues essential to
the development and sustainability of cooperatives. Because so much of
rural America's business endeavors are cooperatively formed, their
continued success is critical for the continued sustainability of the
Nation's rural communities. Through cooperative research agreements,
Rural Development can continue to develop and maintain the information
base vital for innovative, creative, and prudent decision making.
INTERMEDIARY RELENDING PROGRAM
The fiscal year 2007 budget also includes $14.951 million in budget
authority to support $33.925 million in loans under the Intermediary
Relending Program (IRP). We estimate that the proposed level of funding
will create or save approximately 25,952 jobs over the 30-year period
of this year's loans. Participation by other private credit funding
sources is encouraged in the IRP program, since this program requires
the intermediary to provide, at a minimum, 25 percent in matching
funds. To illustrate the benefits IRP provides to rural America, I
would like to share with you a success story from rural Iowa.
A $625,000 IRP loan was made to the Corn Belt Power Cooperative in
Humboldt, Iowa, for the purpose of expanding their existing Revolving
Loan Fund. Together with private sector matching funds, the loan fund
was increased to approximately $2,250,000. Based on historical
performance, Corn Belt Power estimates that approximately 95 jobs will
be created in rural areas with this new injection of funding.
RURAL BUSINESS ENTERPRISE GRANT PROGRAM/RURAL BUSINESS OPPORTUNITY
GRANT PROGRAM
The Rural Business Enterprise Grant (RBEG) and the Rural Business
Opportunity Grant (RBOG) programs are being proposed to be consolidated
into the Federal Economic and Community Development programs as part of
the President's initiatives to help strengthen America's transitioning
and most needy communities. These grant programs, along with others
will be transformed into a new, two-part program: (1) the Strengthening
America's Communities Grant Program, a unified economic and community
development grant program, and (2) the Economic Development Challenge
Fund, a bonus program for communities.
RURAL ECONOMIC DEVELOPMENT LOAN AND GRANT PROGRAMS
The fiscal year 2007 budget includes $7.568 million in budget
authority to support $34.652 million in Rural Economic Development
Loans (REDL) and $10 million in Rural Economic Development Grants
(REDG). This program represents a unique partnership, since it directly
involves the Rural Development electric and telecommunications
borrowers in community and economic development projects. It provides
zero-interest loans and grants to intermediaries, who invest the funds
locally. The return on our equity from rural America is strong.
The following is an example of how one REDL will benefit two States
by allowing a Wisconsin firm to expand its capacity. A loan of $740,000
was provided to the Northwest Telephone Cooperative Association on
behalf of the Laurens Industrial Foundation for Link Snacks, Inc.
Laurens, Iowa has a population under 1,500. The loan will be used to
assist with the purchase of a warehouse facility and equipment to
accommodate Link Snacks, Inc., of Minong, Wisconsin. Link Snacks, Inc.
will use the facility as freezer storage and international distribution
center for a snack and meat production company. In addition, some meat
products will be processed at this site. As a result, the loan will
increase opportunities, help fill vacant space, and create up to 150
new jobs in an area suffering from population decline.
RENEWABLE ENERGY GRANTS/LOAN GUARANTEE PROGRAM
The Renewable Energy Systems and Energy Efficiency Improvements
Program were authorized by the Farm Security and Rural Investment Act
of 2002. The program authorizes loans, loan guarantees, and grants to
farmers, ranchers, and rural small businesses to (1) purchase renewable
energy systems, and (2) make energy efficiency improvements. The fiscal
year 2007 budget proposes a $7.92 million grant program and a budget
authority of $2.243 million to support $34.560 million guaranteed loan
program. The program supports the President's energy policy goals by
helping to develop renewable energy supplies that are environmentally
friendly. In addition, the program contributes to local rural economies
through the creation of jobs and provides new income sources to rural
small businesses, farmers, and ranchers. Finally, the program helps to
reduce the costs of doing business for farmers, ranchers, and rural
small businesses by encouraging the use of energy efficient physical
plant systems. We anticipate 37,440 households will be served, 388
million-kilowatt hours of energy generated while reducing greenhouse
gasses by 0.1 million metric tons. These loans and grants will reduce
oil imports by 73 million barrels in the year funded.
Reducing the costs of operating a business is significant in terms
of job retention. In June, 2005, an energy efficiency improvement grant
of $98,873 was awarded to the New Holland Brewing Company, a Limited
Liability Corporation in Holland, Michigan. Using the grant, as well as
leveraged funds of almost $400,000, the company installed a low
pressure boiling storage system and a new lighting fixture with motion
sensors. Thus, the lights are only on when a person is present to use
them. It is estimated that the energy efficiency improvements are
saving the business between 40 percent and 50 percent of their normal
energy costs.
BIOMASS RESEARCH AND DEVELOPMENT GRANTS
The Biomass Research and Development Grant program, authorized
under section 9008 of the 2002 Farm Bill, is jointly administered by
USDA and the Department of Energy. During fiscal year 2006, Rural
Development will assume USDA's part of the administration of this
program from the Natural Resources Conservation Service. The fiscal
year 2007 budget includes funding to provide up to $12 million in
grants to organizations involved in researching biomass energy
alternatives and developing bio-based energy products.
Mr. Chairman, and members of the Subcommittee, this concludes my
testimony for the Rural Development fiscal year 2007 budget for rural
business-cooperative programs. I look forward to working with you and
other Committee members to administer our programs. I will be happy to
answer any questions the Committee might have.
______
Prepared Statement of Russell T. Davis, Administrator, Rural Housing
Service
Mr. Chairman and members of the Subcommittee, thank you for the
opportunity to present the fiscal year 2007 President's Budget for the
USDA Rural Development rural housing and community facilities programs.
As an integral part of Rural Development, the rural housing
programs assist rural communities with a wide array of single and
multi-family housing options to residents of rural communities. We also
help to fund medical facilities, fire and police stations, childcare
centers, and other essential community facilities.
The proposed budget for rural housing and community facilities
programs in fiscal year 2007 supports a program level of approximately
$6.27 billion in loans, loan guarantees, grants, and technical
assistance. It also maintains the Administration's strong commitment to
economic growth, opportunity, and homeownership for rural Americans. We
believe that our efforts, combined with the best of both the non-profit
and private sectors, will ensure that this budget makes a tremendous
difference in rural communities. The fiscal year 2007 Budget also
includes a major initiative to revitalize the rural rental housing
programs.
Let me share with you how we plan to continue improving the lives
of rural residents under the President's fiscal year 2007 Budget
proposal for our rural housing programs.
PROGRAM HIGHLIGHTS
I am pleased to provide you with an update on several highlights
from our major programs, as well as key initiatives being undertaken.
In fiscal year 2005, we were instrumental in the Federal response
efforts to hurricanes Katrina and Rita. Immediately following the
hurricanes we had our people who were already living in the gulf States
coordinating relief efforts and assisting evacuees with their housing
needs. Our Multi-Family Housing program was able to place about 10,000
individuals or nearly 4,000 hurricane evacuee families nationwide and
was able to offer approximately $17 million in emergency Rental
Assistance. In our Single Family Housing program, we provided immediate
housing payment moratoriums for over 18,000 of our affected borrowers,
suspended foreclosure actions, and opened up our single family housing
inventory properties nationwide in order to place some evacuees. We are
continuing to provide relief and assistance through aggressive loan
servicing, and new loans and grants in the affected areas.
In December 2005, the Department of Defense Appropriations Act for
2006 provided some relief for areas affected by the hurricanes of 2005.
The legislation provides approximately $175.593 million in program
level for section 502 direct single family loans, $1.293 billion in
program level for section 502 guaranteed single family loans, $34.188
million in program level for section 504 home repair loans, and $20
million for section 504 home repair grants. In addition to funding,
Congress gave Rural Development flexibility within their current
statutes and regulations to meet the needs of those affected by the
hurricanes.
We will soon be announcing details for the rural housing voucher
demonstration program and expanded revitalization demonstration program
that were authorized in the 2006 Appropriations Act. We expect to have
these programs fully underway within the next few months.
MULTI-FAMILY HOUSING PROGRAMS
The Multi-Family Housing (MFH) budget preserves Rural Development's
commitment to maintaining the affordable housing for the many rural
Americans who rent their homes. Our existing portfolio provides decent,
safe, sanitary, and affordable residences for about 470,000 tenant
households.
The total program level request is $825.4 million. Four hundred and
$86 million will be used for rental assistance (RA) for contract
renewals, farm labor housing, and preservation. These funds will renew
more than 46,000 2-year RA contracts.
The fiscal year 2007 budget also requests funds for a program level
of $41.6 million in loans and $13.9 million in grants for the Section
514/516 Farm Labor Housing program, and program level of $1.5 million
in loans for credit sales, and $9.9 million for housing preservation
grants.
Multi-Family Housing Revitalization
The fiscal year 2007 budget extends the Administration's proposal
to revitalize USDA's multi-family housing projects by providing $74.2
million for rural housing vouchers for tenants of projects that have
withdrawn from the program. Upon enactment of legislation the
Administration has already submitted to Congress, these funds could
also be used to provide incentives for project sponsors to stay in the
program and make essential repairs and rehabilitations.
We anticipate our revitalization efforts will span the next several
years and have initiated a demonstration program using existing
authority during fiscal year 2005 to test the viability of the
revitalization concepts. The demonstration validated some of the basic
revitalization concepts and helped us identify an efficient process for
implementing the fiscal year 2006 demonstration program and preparing
for the full scale implementation of the revitalization initiative. The
2005 demonstration effort will revitalize 22 rental properties through
12 transactions in the States of Missouri, Wisconsin, Louisiana,
Arkansas, and Georgia. Through these efforts, 559 tenant families will
continue to live in affordable rental housing. Eight of the
transactions have closed and we will complete the remaining shortly.
Section 538 Guaranteed Rural Rental Housing Program
The fiscal year 2007 budget request will fund $198 million in
section 538 guaranteed loans, funds that may be used for new
construction and repairing 515 properties. The section 538 guaranteed
program continues to experience ever-increasing demand and brisk
growth, and is rapidly becoming recognized within the multi-family
housing finance, development, and construction industry as a viable
conduit to facilitate the financing of housing projects.
In fiscal year 2005, we distributed more than $97 million in
guarantees to fund housing projects that attracted over $338 million in
other sources of funds. The risk exposure to the government continues
to be very low, as loan guarantees to total development costs are well
under 30 percent. We also have a delinquency rate of zero. Over 90
percent of the applications were awarded Low-Income Housing Tax Credits
from the various State governments where the projects were located.
This type of leveraging helps ensure that properties are affordable for
low-income families.
Since inception of the program, the section 538 guaranteed program
has closed approximately 100 guarantees totaling over $185 million.
These closed guarantees will provide over 4,500 rural rental units at
an average rent per unit of approximately $500 per month. In addition,
the program has more than 100 applications in the works.
The rural housing program recently published a final rule on
January 19, 2005, to address program concerns from our secondary market
partners and to make the program easier to use and understand. The
fiscal year 2007 proposed budget of $198 million will enable Rural
Development to fund a significant number of additional guaranteed loan
requests.
SINGLE FAMILY HOUSING PROGRAMS
The Single Family Housing (SFH) programs provide several
opportunities for rural Americans with very low- to moderate-incomes to
purchase homes. Of the $4.80 billion in program level requested for the
SFH programs in fiscal year 2007, $3.56 billion will be available as
loan guarantees of private sector loans, including about $99 million
for refinancing more affordable loans for rural families. Also, with
$1.237 billion available for direct loans, an increase of 10 percent
over the 2006 enacted level, our commitment to serving those most in
need in rural areas remains strong. This level of funding will provide
homeownership opportunities for approximately 40,760 rural families.
Effective outreach and a quality guarantee product, coupled with
low interest rates, have increased demand for the section 502
guaranteed program. Currently, approximately 2,000 lenders participate
in the guaranteed SFH program. The competitive low-interest rate
environment has enabled the rural housing program to serve low-income
families, who would typically receive a section 502 direct loan, with a
guaranteed loan instead. To help decrease the Federal cost of this
program, we are requesting the authority to charge up to a 3 percent
guarantee fee for purchase loans. Without the proposed fee change the
budget authority requested will support only $601 million in loans
compared to $3.56 billion available if the 3 percent fee were in place.
In addition, we are ensuring that this program is not redundant with
other Federal guarantee housing loan programs by requiring that the
lender certify that the borrower does not qualify for another guarantee
that the lender offers and that they would not issue the loan without
the guarantee.
Section 523 Mutual and Self-Help Housing
The President's fiscal year 2007 Budget requests $37.6 million for
the mutual and self-help housing technical assistance program, an
increase of 12 percent over fiscal year 2006 levels.
The fiscal year 2005 ended with over $42 million awarded for
contracts and 2-year grants. There were 39 ``pre-development'' grants
awarded in fiscal year 2005, including many first-time sponsors,
several faith-based groups, and groups in States with no self-help
housing programs. Pre-development funds may be used for market
analysis, determining feasibility of potential sites and applicants,
and as seed money to develop a full-fledged application. Groups in the
pre-development phase typically need 6 to 12 months before they are
ready to apply for full funding.
The fiscal year 2007 proposed budget also includes approximately
$36.4 million in program level for home repair loan funds and $29.7
million for grants to assist elderly homeowners. It also includes
approximately $5 million in loan level for each of two site loan
programs, $10 million in loan level for sales of acquired properties,
and approximately $990 thousand for supervisory and technical
assistance grants.
COMMUNITY PROGRAMS
The Community Facilities budget request will provide essential
community facilities, such as educational facilities, fire, rescue, and
public safety facilities, health care facilities, and child care
centers in rural areas. The total requested program level of $521.7
million includes $297 million for direct loans, $207.9 million for loan
guarantees, and $16.8 million for grants.
In partnership with local governments, State governments, and
Federally-recognized Indian Tribes, the fiscal year 2007 budget will
support more than 300 new or improved public safety facilities, 125 new
and improved health care facilities, and approximately 90 new and
improved educational facilities to serve rural Americans.
In fiscal year 2005, we invested over $163 million in 155
educational and cultural facilities serving a population totaling over
1.8 million rural residents, over $136 million in 523 public safety
facilities serving a population totaling over 2.4 million rural
residents, and over $426 million in 166 health care facilities serving
a population totaling over 2 million rural residents. Funding for these
types of facilities totaled $725 million. The remaining balance was
used for other essential community facilities such as: food banks,
community centers, early storm warning systems, child care centers, and
homeless shelters.
CONCLUSION
Through our budget, and the continued commitment of President Bush,
rural Americans will have the tools and opportunities they can put to
work to improve both their lives and their communities. We recognize
that we cannot do this alone and will continue to identify and work
with partners to improve the lives of rural residents.
I would like to thank each of you for your support of the rural
housing and community facility programs' efforts. I look forward to
working with you in moving the fiscal year 2007 Budget forward, and
welcome your guidance as we continue our work together.
______
Prepared Statement of James M. Andrew, Administrator, Rural Utilities
Service
Mr. Chairman, members of the Subcommittee, thank you for the
opportunity to present the President's fiscal year 2007 budget for USDA
Rural Development utilities programs. This is my first appearance
before you and I appreciate the opportunity. We value the work and
support you and other members of this subcommittee have provided us so
that together we can provide a strong, dependable infrastructure in the
rural United States.
A strong rural America is important for a strong Nation. We
consider the rural utilities programs an important part of the USDA
Rural Development mission. Safe, affordable, modern utility
infrastructure is an investment in economic competitiveness and serves
as a fundamental building block of economic development. Changes in the
landscape of rural America, along with developments in technology and
changes in market structure, combined with an ageing utility
infrastructure, are impacting the electric, telecommunications and
water sectors. Without the help of USDA Rural Development's utilities
programs, rural citizens face monumental challenges in participating in
today's economy, as well as maintaining and improving their quality of
life.
The $43.5 billion rural utilities loan portfolio includes
investments in 8,000 small community and rural water and waste disposal
systems, as well as approximately 2,000 electric and telecommunications
systems serving rural America. This local/Federal partnership is an
ongoing success story. Eighty percent of the Nation's landmass
continues to be rural, encompassing 25 percent of the population. For
an economy to prosper, we need infrastructure investment to spur
economic growth, create jobs and improve the quality of life in rural
America.
ELECTRIC PROGRAM
The Electric Program budget proposes a program level of $3.8
billion supported by $2.7 million in budget authority. This includes a
hardship program level of $99 million and a $39.6 million program level
for municipal rate loans. The Direct Treasury rate loan program level
is proposed to be $700 million. There is also $3 billion for the
guarantee of Federal Financing Bank (FFB) direct loans. The FFB loans
are made at the cost of money to the Federal Government plus an one-
eight of a percent. Both the President and Congress have provided very
generous loan levels over the past four years and we have been able to
eliminate the backlog in loan applications. I believe the President's
budget request will meet the demand during the 2007 fiscal year.
To meet the demands of economic growth across our Nation, the need
for transmission lines to deliver electric power where it is needed is
placing new demands on cooperatives providing transmission service.
Last year we predicted that because in the last twenty years no new
base load capacity had been built, there would be an increasing demand
for power generation and transmission. We are now seeing the first of
many applications for those base load requirements. However, past
history has shown that base load is riskier than other projects. We
intend to develop a separate subsidy rate that reflects the increased
risk and incorporates a fee to offset the cost. Legislation will be
necessary to allow for a fee. Within the $700 million requested for
direct loans, we plan to make $200 million available for renewable
energy projects.
TELECOMMUNICATIONS PROGRAM
The area of rural telecommunications is the most rapidly changing
aspect of rural utilities infrastructure. Job growth, economic
development, and the quality of life in rural America are directly tied
to access to today's high speed telecommunications. We administer the
Broadband Loan Program, the traditional Telecommunications
Infrastructure Loan Program, as well as Distance Learning and
Telemedicine Loan and Grant Programs.
The fiscal year 2007 Broadband Loan Program budget proposes a
program level of $356.4 million driven by $10.8 million in budget
authority. This replaces the mandatory funding provided by the Farm
Bill for the 2007 fiscal year. Moreover, as a result of decreased
subsidies, the President's budget will deliver nearly the same program
level as was anticipated by the Farm Bill. When the 2002 Farm Bill was
enacted, the mandatory funding anticipated a program level of
approximately $400 million a year. The proposed budget is reflective of
the intent of the Farm Bill and as it has turned out, more in concert
with the demand in qualified loan applications.
Included in the broadband loans budget proposal is $29.7 million in
direct 4 percent loans requiring $3 million in budget authority; $297
million in direct Treasury Rate loans is requiring $6.4 million in
budget authority, and $29.7 million in guaranteed loans requiring $1.4
million in budget authority.
We are reviewing every aspect of the program with a view toward
making needed improvements. We must continue to balance fiduciary
responsibility with mission delivery. Making bad loans helps no one;
making successful loans helps everyone.
In the regular Telecommunications Program, the 2007 budget proposes
a program level of $689 million. Included is $143.5 million in direct 5
percent loans, $246.7 million in direct Treasury Rate loans, and $299
million in Federal Financing Bank (FFB) direct loans guaranteed by USDA
Rural Development. All of this is driven by $605,000 in budget
authority.
I am happy to report that the dissolution of the Rural Telephone
Bank is progressing on schedule. No funds are requested for that
program.
Distance learning and telemedicine technologies are having a
profound impact on the lives of rural residents. This program helps
rural schools and learning centers to take advantage of the information
age and enables rural hospitals and health care centers to have access
to quality medical services only found in large hospitals. The Distance
Learning and Telemedicine (DLT) program pulls together the best of
Federal assistance and local leadership. The DLT grants are budgeted at
$24.75 million. The President's proposal does not request loan program
funding simply because the demand for loans to schools and hospitals
has never developed and funding is available from previous years to
support new loans in fiscal year 2007.
WATER AND ENVIRONMENTAL PROGRAMS
The Water and Environmental Programs provide the most basic of
infrastructure needs for rural citizens: clean, safe, affordable
drinking water and ecologically sound wastewater disposal. No element
is more vital to human life and dignity as clean, safe water. Rural
communities are challenged to provide this vital service while facing
increasing regulatory requirements and persistent drought conditions
across a large area of the country.
The budget request seeks a program level of $1.4 billion in loans
and grants, costing $514 million in budget authority. The total is
divided with $990 million in direct loans and $75 million in loan
guarantees for the Water and Waste Disposal programs. The direct loan
program requires $164.7 million in budget authority. The budget request
also includes $345.9 million in Water and Waste Disposal Grants and
$3.4 million in Solid Waste Management Grants.
SUMMARY
Rural Utilities infrastructure programs are interwoven in the
fabric of USDA Rural Development programs. To provide safe, clean,
water; modern communications; and reliable, affordable electric power
means businesses can develop, homes can have light and heat, and
markets can be opened to the rest of the world. We will play our part
in building communities from the ground up.
Thank you for the opportunity to present the President's fiscal
year 2007 Budget for USDA Rural Development utilities programs.
______
Prepared Statement of Dr. Joseph J. Jen, Under Secretary, Research,
Education, and Economics
Mr. Chairman, members of the Committee, it is my pleasure to appear
before you to discuss the fiscal year 2007 budgets for the Research,
Education, and Economics (REE) mission area agencies of the USDA. I am
accompanied by Dr. Merle Pierson, Deputy Under Secretary of REE and the
Administrators of the four agencies: Dr. Edward Knipling, Administrator
of the Agricultural Research Service (ARS); Dr. Colien Hefferan,
Administrator of the Cooperative State Research, Education, and
Extension Service (CSREES); Dr. Susan Offutt, Administrator of the
Economic Research Service (ERS); and Mr. Ronald Bosecker, Administrator
of the National Agricultural Statistics Service (NASS). Also present is
Dr. Scott Steele, Director of the Office of Budget and Program Analysis
of the Department. Each Administrator has submitted written testimony
for the record.
The President is committed to reducing the budget deficit by half,
and USDA as well as many departments across the Federal Government have
been called on to help make this a reality. The President's fiscal year
2007 budget proposes $2.283 billion for the four REE agencies to
conduct research, education, economics and statistical programs. This
represents a slight decrease of $39 million from the level in the
President's fiscal year 2006 budget and a $401 million decrease from
the total REE appropriation in fiscal year 2006. Within this decrease,
the agency budgets have critical increases in high priority areas such
as food and agricultural defense, nutrition and obesity, genomics, and
animal and plant diseases.
Agricultural research is truly the lynchpin of the American food
and agricultural system. A great deal of the system's success over many
decades is attributable to the new scientific understandings and
technology generated by our national food and agricultural research
system, of which USDA's research agencies are key components. Numerous
studies have found that the return on investment in agriculture
research is high. Whether measured in productivity, competitive
strength in global markets, environmentally sustainable production
practices, or new science-based food safety technology, research and
development underpins essentially all advances in the food and
agriculture sector. It provides a necessary condition for success.
Natural events, market conditions and resistance to adoption of new
technologies can be formidable barriers to success. At the same time,
absent cutting-edge research, the food and agriculture sector runs the
risk of losing its edge in increasingly competitive global markets. In
that context, I look forward to your consideration of the many
important requests for the four REE agencies proposed in the
President's budget.
The budget we are discussing today includes what I consider to be
an innovative and excellent proposal for restructuring the Hatch and
McIntire-Stennis formula programs. The Administration has been on
record for some years as believing that competitive programs provide
the most effective mechanism for allocating research funds to solve
pressing national problems. Consistent with that proposition, the
fiscal year 2007 President's budget proposes an innovative approach to
introducing competition into the Hatch and McIntire-Stennis formula
programs. Under the proposal, the current Hatch multi-state research
program will be expanded from 25 percent to approximately 56 percent of
the total Hatch funding in 5 years. As current multi-state projects are
completed, an increasing portion of these multi-state funds will be
competed. A similar proposal is made for the McIntire-Stennis formula
program, with the introduction of a new nationally-competed multi-state
program in fiscal year 2007.
This design of the proposal for the two formula programs is
responsive to the concerns raised by many stakeholders to last year's
budget proposal. Among other things, the new proposal sustains matching
funds and sustains the land grant institutions' Federal funds for
leveraging non-Federal resources. In addition, it does not reduce
appropriated funding from the fiscal year 2006 enacted level. The
Department looks forward to working with the State Experiment Stations
and forestry colleges in developing an implementation plan for this
expanded multi-state program.
Before turning to the individual agency budgets, I would like to
describe increases in three particularly high priority areas for the
Department: food and agricultural defense, nutrition and obesity, and
genomics.
Food and Agricultural Defense Initiative.--Now in its 5 year, the
Food and Agriculture Defense Initiative is designed to strengthen the
Federal Government's capacity to defend the Nation's food and
agricultural systems against terrorist attacks, major disasters and
other emergencies. The fiscal year 2007 budget provides increased
program funding of $42.3 million for ARS and $7.1 million for CSREES to
expand their participation in this initiative.
Under the Food Defense component of the initiative, ARS increases
will allow the agency to expand its food safety research, particularly
focused on developing technology that rapidly identifies suspected food
pathogens and toxins. The budget also proposes an increase of $4.2
million for ARS' National Plant Disease Recovery System which is
designed to ensure that disease resistant seed varieties are
continually developed and made available to producers in the event of a
natural or intentional catastrophic disease or pest outbreak. An
increase of $24.6 million will support strengthening ARS' ongoing
research on rapid response systems to bioterror agents, improved
vaccines, and identification of genes affecting disease resistance.
The budget provides CSREES $12 million, an increase of $2.1 million
from fiscal year 2006, to maintain and enhance the Regional Diagnostic
Network of public agricultural institutions that serves as a component
of APHIS diagnostic laboratories for both animals and plants. The
initiative also includes $5 million for a competitive Higher Education
Agrosecurity Program that promotes the training of food system defense
professionals critically needed in securing our Nation's agriculture
and food supply.
Nutrition and Obesity.--Concern continues regarding the epidemic of
obesity in the Nation. Particularly distressing is the incidence of
obesity in children, estimated to be approximately 16 percent for
children and adolescents ages 6 to 19. Recent studies show that Type 2
diabetes, previously considered an adult disease associated with
obesity, is increasingly found in children. Future projections of the
incidence of diabetes, particularly for Hispanic and African-American
children, are alarming. The causes of obesity are many and complex.
Levels of physical activity, reliance on convenience food, large food
portions, and genetic make-up all play a role. Whatever the set of
causes and their interplay, collectively they portend greater problems
for individuals, families, communities and the country, with the
potential for significant productivity losses to the economy and
increases in health-related expenses. Funding for research now could
significantly contribute to the reduction of these negative impacts in
the future.
As the Federal Government department most closely associated with
food policy and programs, USDA has an important role in addressing the
obesity challenge and more broadly promoting healthy nutrition and
weight. Its food assistance, nutrition education, and nutrition
research programs are all addressing this major national public health
problem.
Under the President's HealthierUS Initiative, the fiscal year 2007
budget proposes increases and program redirections for ARS, CSREES, and
ERS that will strengthen the Department's capacity to address obesity
and associated issues. The increases focus on gaining a better
understanding of food consumption patterns and the factors influencing
them, and on developing effective interventions to promote healthy
dietary choices.
ARS increases and redirection of funds total $11.3 million, of
which $4.7 million will support a longitudinal study to assess the
long-term benefits and approaches to controlling weight. We know that
it is easy for people to control weight for a short period, but very
difficult to do so for extended periods of time. This initiative will
be the only one of its type to address the efficacy of the healthful
eating and physical activity patterns set forth in the Dietary
Guidelines in preventing obesity in the U.S. population, with
particular attention focused on children. One aspect of the obesity
conundrum is that the factors affecting dietary choices and the effects
of those choices are not only complex, but vary with subpopulations.
Redirected funds in ARS will be used to gain a better understanding of
dietary patterns that contribute to obesity in low socioeconomic and
minority populations. Other redirected funds will support research to
develop effective, and likely distinct, dietary strategies for
children, middle-aged adults and Native Americans.
An ERS increase of $1.6 million under the agency's new consumer
data and information system will be used to obtain food-away-from-home
data that is important in supporting the development and targeting of
USDA policies and programs to help improve the diets and nutrition of
all consumers, particularly low-income consumers.
Genomics.--The future of agriculture rests in genomics and
associated molecular biology. Moreover, in many ways that future is
here. Genomics and molecular biology are now effectively being used in
many types of food and agricultural research focused on a wide range of
research objectives. Over the last several years, ARS and CSREES have
increased their investment in genomics and molecular biology, helping
to lay the foundation for their use today in applied research. Past
increases have supported sequencing the genome of important
agricultural plants and animals and learning about the functions of
different genes and how they can be turned on and off. ARS and CSREES
supported researchers are now aggressively using the technology
associated with genetic and molecular biology toward such goals as
developing rapid detection tests, isolating disease resistant plant
varieties, and enriching the nutrients in food.
Both the ARS and CSREES budgets continue a trend of requested
increases in genomics. The President's fiscal year 2007 budget provides
a total of almost $17.7 million for the two agencies. The ARS budget
provides an additional $8.7 million to identify genes that influence
animal and plant growth and quality, disease resistance, and other
economically important traits. The proposed increases in the National
Research Initiative (NRI) of CSREES would support new or more research
in domestic animal genomics ($5 million), genomics to improve
production of biofuels and biobased products ($1 million) and molecular
biology to improve the water use-efficiency of plants ($3 million).
An important part of the ARS and CSREES genomics programs is active
partnering with other science institutions and governments. For
example, research on plant genomics, in particular sequencing the
soybean genome, is being supported through a CSREES partnership with
the U.S. Department of Energy. ARS and CSREES are both coordinating
their genomics research with NIH's National Human Genome Research
Institute, and the National Science Foundation.
Classical Chinese Garden.--Under the ARS Building and Facilities
program, the President's budget proposes $8.4 million towards a
Classical Chinese Garden at the U.S. National Arboretum. The Garden is
a gift from the Chinese government and people to the U.S. Government
and people. Once completed, the Garden will be the finest example of a
Classical Chinese Garden outside of China. The Garden will also enrich
the Arboretum's research program, through increasing the availability
of vast numbers of plants from China that can be used to develop new
and improved ornamental and floral plants in the United States. The
proposed $8.4 million will be used for design validation,
infrastructure, and site preparation only. An estimated equivalent of
over $50 million will be contributed by the China's State Forestry
Administration towards the Garden. The Chinese government is providing
the garden structures, rockeries, furniture, art objects, and unique
plants and is reassembling all the structures and placing them on the
infrastructure foundation provided by the United States.
REE FISCAL YEAR 2007 INITIATIVES
I would now like to turn briefly to the budgets of the four REE
agencies.
Agricultural Research Service.--The Agricultural Research Service
fiscal year 2007 budget requests slightly over $1 billion in ongoing
research and information programs and facilities. Within the total, the
budget proposes increases of $57.7 million dedicated to high priority
programs addressing issues of national and regional importance, several
of which were previously described. The budget also proposes $49.1
million in program redirections of ongoing base resources to enhance
priority research objectives. To offset the increases, terminations of
approximately $195.7 million in current programs are proposed. As the
principal intramural biological and physical science research agency in
the Department, ARS continues to play a critical role for the
Department and the larger agricultural community in conducting both
basic and mission-oriented research. Results from ARS' basic research
provide the foundation for applied research carried out by ARS,
academic institutions and private industry. ARS' applied research and
technology development address the research needs of other USDA
agencies, as well as of those engaged in the food and agriculture
sector.
In addition to the increases previously described, the ARS budget
proposes increases to strengthen its research program addressing
several diseases, pests, and pathogens threatening crop and animal
production and marketing and in some cases, human health. Bovine
Spongiform Encephalopathy (BSE) continues to be a challenge for the
livestock sector, particularly as it relates to foreign markets. An
increase of $9.8 million will support ARS scientists in the development
of countermeasures to detect, control, and eradicate future BSE and
Chronic Wasting Disease. Rust diseases, such as Asian soybean rust,
pose severe problems throughout the United States. A $3.9 million
increase will focus on controlling or minimizing the spread of rust
diseases of grains and soybeans. Throughout the country, different
varieties of invasive weeds, insects, and pathogens cause tens of
billions of dollars of agricultural losses each year. Research on these
wide-ranging threats such as the Asian Longhorned Beetle and Salt Cedar
will be enhanced with a proposed $5.4 million increase.
Development of biobased fuels continues to be a high Administration
priority. Research is critical to both improve the agricultural biomass
feedstock for the production of energy and to develop the technologies
to produce biofuels from the feedstock. An increase of $3.6 million
will enhance ARS on both these research objectives, as well as
development of other biobased products. Other priority programs to be
strengthened through funding increases or redirections include climate
change and associated carbon sequestration, water quality and
technologies to minimize vulnerability to drought, and air quality in
the context of animal feeding.
The Abraham Lincoln National Agricultural Library (NAL), one of
four national libraries, serves as a valuable national resource for
information on food and agricultural sciences. Full integration of many
kinds of digital information and fast, seamless navigation among them
are essential for NAL to meet the increasingly complex customer
demands. Proposed funding of $4 million will be used to sustain the
national collection of agricultural information warranted by a national
library. The funds will also be used to continue developing information
technology to manage and deliver information efficiently.
Cooperative State Research, Education, and Extension Service--The
President's fiscal year 2007 budget provides the Cooperative State
Research, Education, and Extension Service just over $1 billion, which
is approximately the same as the President's fiscal year 2006 budget
and $161.3 million less than fiscal year 2006. In providing critical
funding for the research, education, and extension programs of the Land
Grant system and other universities and organizations across the
country, CSREES continues to play a central role in the generation of
new knowledge and technology, and the transfer of that knowledge and
technology to stakeholders.
The restructuring of the Hatch and McIntire-Stennis formula
programs at the same overall funding levels as fiscal year 2006 is a
critical part of CSREES' budget proposal. The budget also includes
important increases to strengthen high priority programs.
The NRI, the agency's flagship competitive research program,
continues to be a very effective avenue for supporting cutting-edge
research conducted by the finest scientists across the country. The
fiscal year 2007 budget proposes a $66.3 million increase in the NRI.
In addition to the increases in genomic research previously described,
the budget provides for increases in animal production, emerging issues
in food and agricultural biosecurity, and invasive species. A $42.3
million increase in the NRI on-going programs is being shifted from the
Integrated Activities account to the NRI to achieve greater efficiency
in program administration. The focus of the programs, including water
quality and food safety, will stay the same.
The proposed CSREES budget also includes an increase of about $1
million to a total of $6.9 million to fund outreach and technical
assistance for socially disadvantaged farmers and ranchers.
Economic Research Service.--The Economic Research Service is
provided $82.5 million in the President's fiscal year 2007 budget. As
the Department's principal intramural economics and social science
research agency, ERS conducts research and analysis on the efficiency,
efficacy, and equity aspects of issues related to agriculture, food
safety, human nutrition, the environment, and rural development. In
addition to the increases described above related to obesity and
nutrition, the budget includes $5 million to fund a new Agricultural
and Rural Development Information System, a comprehensive data
collection and research program to monitor the economic health and
well-being of farm and non-farm households in rural areas. The increase
will support collection of multiple-year, longitudinal information on
rural household in areas with specific challenges, such as persistent
poverty and population loss, and adds a longitudinal component to
USDA's Agricultural Resource Management Survey (ARMS) to collect
information on farms in the same areas. In particular, the information
generated will support programs administered by the Department's Rural
Development mission area.
National Agricultural Statistics Service.--The National
Agricultural Statistics Service budget requests $152.5 million, an
increase of $13.3 million over the fiscal year 2006 Act. NASS'
comprehensive, reliable, and timely data are critical for informing
policy decisions to keep agricultural markets stable, and to ensure a
level playing field for all users of agricultural statistics. The
President's budget provides increases in the agency's agricultural
estimates program and the Census of Agriculture.
An increase of $3.9 million is directed at the continuing
restoration and modernization of the agency's core survey and
estimation program begun in fiscal year 2004. Producers rely on the
NASS surveys as being comprehensive and accurate in making their
decisions. Funding received in the fiscal year 2004 through fiscal year
2006 appropriations has been used to successfully improve the precision
level for commodity surveys conducted by NASS for State, regional, and
national estimates through sample size increases and better survey
response. Funding requested in fiscal year 2007 will promote data
quality by encouraging voluntary response through increased respondent
awareness of market and policy reliance upon USDA-NASS statistical
measures and by improving the data collection capabilities of local
interviewers throughout the Nation. The budget also provides an
increase of $7.3 million for the Census of Agriculture based on its 5
year cycle. The increase supports the normal increase in the level of
activity as the next Census year, 2007, approaches. The 2007 data will
be collected in 2008. For the first time, respondents will be able to
complete the survey over the Internet.
SUMMARY
In summary, the REE agencies' budgets we are discussing today
present a balanced research, education, and economics portfolio, with
investments in such high priority issues as animal disease, nutrition
and obesity, food safety and farm household well-being. Such a budget
is particularly notable at a time of severe budget constraints.
Reflecting back on the importance of research to the long-term
success and competitiveness U.S. agriculture, it is critical that a
strong, dynamic, and focused food and agricultural research portfolio
be sustained. The proposals for REE in the President's budget will do
just that. This concludes my statement. Thank you for your attention. I
look forward to answering your questions.
______
Prepared Statement of Dr. Edward B. Kniplings, Administrator,
Agricultural Research Service
Mr. Chairman, and members of the Subcommittee, I appreciate this
opportunity to present the Agricultural Research Service's (ARS) budget
recommendations for fiscal year 2007. The President's fiscal year 2007
budget request for ARS' research programs is a little over $1 billion,
a net decrease of $123 million or about 11 percent from the fiscal year
2006 funding level. There are several components to ARS' fiscal year
2007 budget request: (1) $106.8 million for new and expanded priority
research initiatives ($57.7 million represents a net increase in budget
authority and $49.1 million is from reprogramming); (2) $15.4 million
for pay costs; (3) $3.1 million for reprogramming recommendations to
transfer resources from existing locations in support of priority
research needs; and (4) $195.7 million for proposed program and project
terminations.
Of the proposed new and enhanced research increases, $48.2 million
is in support of the Federal Government's initiative to strengthen the
Nation's homeland security. Homeland security research is in the areas
of food safety, emerging and exotic diseases of animals and crops, and
for the National Plant Disease Recovery System. ARS is also proposing
new and expanded initiatives for research on Bovine Spongiform
Encephalopathy (BSE), invasive species of animals and plants, nutrition
and obesity, genetics and genomics, biobased products and bioenergy,
air and water quality, and climate change. Increases for the National
Agricultural Library and information technology are also requested.
The budget proposes the termination of a number of research
laboratories and projects and associated resources appropriated in
recent years totaling $195.7 million. The savings to be achieved
through the proposed terminations will finance the higher priority
research initiatives proposed in ARS' budget, as well as help reduce
overall Federal spending.
The ARS budget also includes $8.4 million under its Buildings and
Facilities account for the construction of infrastructure for a
Classical Chinese Garden at the U.S. National Arboretum in Washington,
DC.
PROPOSED PROGRAM INCREASES AND REDIRECTIONS
These high priority increases respond to urgent, nationwide issues
in critical areas, such as homeland security, emerging diseases, food
safety, obesity, climate change, invasive species, and genomics and
genetics, that affect the entire country.
--Food Safety--$13.8 Million.--Ensuring the safety of the Nation's
food supply is essential and vitally important to the Nation's
homeland security. Bioterrorism against our food supply would
affect the health and safety of consumers and their confidence
in the safety of the foods they consume. It would also have
far-reaching impacts on the country's economy, since U.S.
agriculture employs nearly one-quarter of the Nation's
workforce and annually contributes over one trillion dollars to
the gross domestic product. ARS research will focus on
assessing the vulnerabilities of the food supply, strengthening
and expanding laboratory preparedness, and developing
technologies which rapidly identify suspected food pathogens
and toxins. ARS will work in these areas of prevention,
detection, and response with the Food Safety and Inspection
Service and other USDA agencies, through programs, such as the
Collaboration for Animal Health and Food Safety Epidemiology.
--Human Nutrition/Obesity Prevention Research--$11.3 Million.--Two of
every three American adults and an increasing number of
children are overweight or obese, making obesity one of this
country's fastest growing public health problems. It
contributes to heart disease, cancer, diabetes, and other
illnesses resulting in hundreds of billions of dollars in
health care costs each year. Understanding food consumption
trends and the factors that influence dietary choices is
critical for developing strategies for preventing and
mitigating obesity. ARS will use the proposed increase to
conduct nutrition surveys and research to prevent childhood and
adult obesity, and to develop strategies which encourage
healthy food choices.
--Avian Influenza (AI) and Foot-and-Mouth Disease (FMD)--$6.1
Million.--Animal health officials define a foreign animal
disease as a transmissible livestock or poultry disease that
has a potentially significant health or economic impact. AI and
FMD are two of the most serious foreign animal diseases which
presently threaten the United States. ARS will use the proposed
increase to: develop diagnostic detection tools that can be
more widely used in field situations, increase our
understanding of disease epidemiology (i.e., spread of virus,
routes of transmission, persistence of infection), and deploy
countermeasures in the form of vaccines and antivirals.
--Bovine Spongiform Encephalopathy (BSE) and Chronic Wasting Disease
(CWD)--$9.8 Million.--BSE is a progressive, degenerative, fatal
disease affecting the central nervous system of adult cattle.
It is believed that eating contaminated beef products from BSE-
affected cattle causes a variant form of Creutzfeldt-Jacob
Disease in humans. The first case of BSE was identified in the
United States on December 23, 2003. CWD is a disease which
affects deer and elk. Unlike BSE, CWD does not appear to be
transmissible to humans, but it is worrisome because it could
jump species barriers and become more virulent or infectious.
The proposed increase will enable ARS scientists to develop
countermeasures to detect, control, and eradicate future BSE
and CWD outbreaks.
--Soybean and Wheat Stem Rust--$3.9 Million.--Rust diseases pose
severe problems in crops throughout the United States. Since
2000, Stripe Rust has caused hundreds of millions of dollars in
losses to wheat growers. Asian Soybean Rust (SBR) is reported
to cause up to 80 percent yield losses in numerous countries
around the world. The first incidence of SBR, in nine soybean
producing States in the United States, was confirmed by the
Animal and Plant Health Inspection Service (APHIS) in 2004. The
proposed increase will be used to control or minimize the
spread of SBR, Stripe Rust, and other rust diseases of grains
and soybeans.
--Emerging and Exotic Diseases of Animals and Plants--$15.3
Million.--The United States is increasingly vulnerable to
emerging animal and plant diseases which could threaten the
Nation's homeland security. The threat of new diseases--whether
they are a result of bioterrorism or of naturally occurring
epidemics--is an urgent and growing challenge to livestock
producers. Bovine Viral Diarrhea in cattle, Porcine
Reproductive Respiratory Syndrome in swine, and Marek's disease
virus in chickens are examples of these exotic diseases.
Harmful animal diseases introduced to the United States in
recent years from foreign countries include Exotic Newcastle
Disease and Monkeypox. Brucellosis, Leptospiroris, and West
Nile Virus are still other examples of zoonotic diseases that
pose a threat not only to animals but to humans as well.
Similarly, exotic and emerging plant diseases--wheat and barley
rusts, citrus canker, and corn viruses--present a potential
threat to the Nation's agriculture industry. With the proposed
increase, ARS will develop vaccines, intervention strategies,
and diagnostics for the detection, identification, control, and
eradication of these animal and plant disease threats.
--Emergency Research Needs and Research to Assist APHIS--$7.4
Million.--APHIS has requested help from ARS in controlling
various animal diseases, such as FMD, Rift Valley Fever, and
Classical Swine Fever, and plant diseases, such as Citrus
Canker and Citrus Leprosis Virus. There is also a need for ARS
to be able to respond to unanticipated special research needs
and emergencies. Often, funds are not readily available for
these situations. The proposed increase will provide ARS with
the flexibility to respond quickly to special needs and
emergencies as well as support APHIS' efforts to control and
eradicate pests and diseases.
--National Plant Disease Recovery System--$4.2 Million.--The
emergence or spread of certain plant diseases, such as soybean
rust, citrus variegated chlorosis, or bacterial wilt, could
seriously harm America's agriculture. Recovery from a
significant disease outbreak requires a national system to
manage host/pathogen interactions using cultural, biological,
and chemical control strategies and deploy resistant plant
resources. Homeland Security Presidential Directive (HSPD-9)
has charged ARS with the responsibility for leading this effort
with the Cooperative State Research, Education and Extension
Service (CSREES), APHIS, and others. ARS will use the proposed
increase to minimize the impacts of devastating crop diseases
by documenting and characterizing plant diseases, developing
germplasm and plant varieties with improved disease resistant
characteristics, implementing integrated pest management
approaches, and transferring genetic resources (i.e., disease
resistant plant varieties) to its customers.
--Invasive Species--$5.4 Million.--Invasive weeds, insects,
pathogens, and other pest species cost the United States tens
of billions of dollars each year in agricultural losses,
negatively impacting the environment and biodiversity as well.
Sudden Oak Death has had negative effects on California's plant
nurseries. Salt Cedar and Yellow Starthistle (invasive weeds)
have caused agricultural and environmental damage in several
western States. Lobate Lac Scale, Asian Longhorned Beetle, and
Emerald Ash Borer (invasive insects) have caused damage to a
wide range of plant species. Animals are also at risk. Imported
Fire Ants, which inhabit over 350 million acres in 12 southern
States, from Texas to Virginia, damage crops and are a threat
to livestock, wildlife, and humans. ARS will use the proposed
increase to target its research on controlling invasive species
including Imported Fire Ants, Sudden Oak Death, Salt Cedar,
Yellow Starthistle, Lobate Lac Scale, Asian Longhorned Beetle,
and Emerald Ash Borer.
--Applied Genomics--$8.7 Million.--Genomics holds the key to
maintaining America's agricultural competitiveness in global
markets. Advances in genomics research can improve the
production and quality of food products, prevent animal and
plant diseases, and produce foods which are richer in
nutrients. To capture the potential of genomics, ARS needs to
continue its work on characterizing, identifying, and
manipulating the useful properties of genes and genomes. In
this regard, ARS will use the proposed increase to identify
genes that influence animal and plant growth and quality,
disease resistance, and other economically important traits.
ARS will continue to coordinate its genomics research with
National Institutes of Health's National Human Genome Research
Institute, CSREES, and the National Science Foundation.
--Genetic Resources--$2.6 Million.--The rate of extinction of lines
and strains of food animals and plants is accelerating. The
Nation needs a more comprehensive program to maintain
threatened germplasm to prevent the loss of genetic diversity.
An adequate supply of useful genes is essential in the event of
bioterrorism or other crises (e.g., FMD, Exotic Newcastle
Disease, etc.). With the proposed increase, ARS will enhance
its ability to collect, identify, characterize, and incorporate
plant germplasm into centralized gene banks. The additional
funding will help sustain ARS' National Plant Germplasm System
repositories; it will also enable further development of
cryopreservation technologies for long-term storage of
important animal germplasm (i.e., of poultry, aquaculture,
cattle and swine).
--Biobased Products/Bioenergy Research--$3.6 Million.--The Biomass
Research and Development Act of 2000 and the Food Security and
Rural Investment Act of 2002 encourages the development and use
of biobased products. There is also a need to expand the
development of bioenergy. ARS will focus its research on: (1)
improving the quality and quantity of agricultural biomass
feedstocks for the production of energy and biobased products,
(2) developing technologies to produce biofuels from
agricultural commodities and byproducts, and (3) developing
technologies leading to new value-added products from food
animal byproducts. Increased development of bioenergy and
biobased products will expand market opportunities for U.S.
agriculture, reduce the Nation's dependence on petroleum
imports from unstable regions, and improve environmental
quality by reducing air pollution and greenhouse gas emissions.
--Air/Water Quality and Drought Mitigation--$3.5 Million.--Millions
of Americans are exposed to air pollution levels that exceed
the Environmental Protection Agency's air quality standards.
Agriculture activities, such as animal production operations,
which produce ammonia, particulate matter, and volatile organic
compounds, can adversely affect air quality. Another concern is
the quantity and quality of water available in the United
States. Drought and its impacts annually cost the Nation $6 to
$8 billion. ARS will use the proposed increase to develop new
technologies that reduce gaseous and particulate matter
emissions from animal feeding operations. It will also provide
technologies that help ensure adequate water for agriculture
and improve the health of the Nation's streams, rivers, and
lakes.
--Global Climate Change--$3.2 Million.--Climate change encompasses
global and regional changes in the earth's atmospheric,
hydrological, and biological systems. Agriculture is vulnerable
to these environmental changes. The objective of ARS' global
change research is to develop the information and tools
necessary for agriculture to mitigate climate change. ARS has
research programs on carbon cycle/storage, trace gases (i.e.,
methane and nitrous oxide), agricultural ecosystem impacts, and
weather/water cycle changes. ARS will use the proposed increase
to develop climate change mitigation technologies and practices
for the agricultural sector. Specifically, ARS will: (1)
conduct interdisciplinary research leading to technologies and
practices for sustaining or enhancing food and fiber production
and carbon sequestration by agricultural systems exposed to
multiple environmental and management conditions, (2) expand
the existing network of ARS sites conducting measurements of
greenhouse gas fluxes between the atmosphere and the land, and
(3) identify ways to decrease methane emissions associated with
livestock.
--National Digital Library for Agriculture and Improved Agricultural
Information Services--$4.0 Million.--In 2001, both a ``Blue
Ribbon Panel'' and an advisory board concluded that the
National Agricultural Library (NAL) needed increased resources
to meet its potential, taking advantage of technological
innovations for timely information access and retrieval. Full
integration of many kinds of digital information and fast,
seamless navigation among them are essential for NAL to satisfy
the increasingly complex interdisciplinary information needs of
its customers. The proposed funding will support the
revitalization of NAL, enabling it to better deliver relevant
information products, satisfy increasingly complex customer
demands, and provide leadership as the premier agricultural
information resource of the United States.
--Information Technology--$4.1 Million.--ARS information technology
(IT) systems and networks are exposed to an unprecedented level
of risk. Of particular importance is safeguarding the Agency's
pathogenic, genomic, and other sensitive research information
from being acquired or destroyed by unauthorized intruders
through unprotected or undetected cyber links. Agencywide
centralized security measures are needed to counter security
threats. ARS must also ensure that its IT infrastructure (i.e.,
computers, network hardware, etc.) is up-to-date and reliable.
ARS will use the proposed increase to replace, upgrade, and
secure its IT equipment and systems.
PROPOSED OPERATING INCREASES
In addition to the proposed research initiatives, ARS' fiscal year
2007 budget provides funding to cover costs associated with pay raises.
An increase of $15.4 million is essential to finance these costs and to
avoid erosion of the Agency's base resources.
PROPOSED PROGRAM DECREASES
ARS is proposing the reduction/termination of selected research
programs and projects, totaling $195.7 million, to finance higher
priority research and support the Administration's efforts to reduce
spending and the Federal deficit. As the country faces new challenges
in the areas of homeland security, food safety, and obesity, ARS needs
to reprioritize and reallocate resources. Many of the projects being
reduced or terminated pertain to research carried out by other ARS
locations or other research institutions.
PROPOSED REPROGRAMMINGS
The proposed budget includes $3.1 million to reprogram programs and
resources currently operating at Baton Rouge, Louisiana and Lane,
Oklahoma. Funding for Soil and Water research at Baton Rouge, Louisiana
is proposed to be reprogrammed to higher priority initiatives and
obesity research at the Pennington Biomedical Research Center at Baton
Rouge. Similarly, funding for crop genetics research at Lane, Oklahoma
is proposed to be reprogrammed to higher priority forage-livestock
research at ARS' El Reno and Woodward, Oklahoma locations.
PROPOSED INCREASE FOR BUILDINGS AND FACILITIES
The fiscal year 2007 budget recommends $8.4 million for ARS'
Buildings and Facilities account. The Agency is recommending these
funds be used to assist in the construction of a Classical Chinese
Garden (CCG) at the U.S. National Arboretum (USNA) in Washington, DC,
most of which will be built and paid for by the People's Republic of
China. The Garden will serve as a symbol of friendship between the
Chinese and American people and help promote better relations between
the two nations. The proposed new garden will also serve as a major
research facility. The project will enable the introduction of unique
Chinese flowers and plants into the United States for horticultural
research purposes.
CCG is a priority project for the USDA and the People's Republic of
China (PRC). The design was developed by a joint team from the PRC and
the United States and has been approved by the National Capital
Planning Commission and the District of Columbia Commission on Fine
Arts.
The structure, landscaping, and interior furnishings of the CCG
will be provided by the Chinese State Forestry Administration. The land
at USNA has been made available by USDA. As part of this venture, USDA
is responsible for providing the infrastructure and site work,
including grading and foundations. The proposed $8.4 million is to
cover these activities. USDA will subsequently be responsible for the
security and maintenance of the garden.
Mr. Chairman, this concludes my presentation of ARS' budget
recommendations for fiscal year 2007. I will be happy to respond to any
questions the Committee may have.
______
Prepared Statement of Dr. Colien Hefferan, Administrator, Cooperative
State Research, Education, and Extension Service
Mr. Chairman and Members of the Committee, I appreciate the
opportunity to present the President's fiscal year 2007 budget for the
Cooperative State Research, Education, and Extension Service (CSREES),
one of the four agencies in the Research, Education, and Economics
(REE) mission area of the United States Department of Agriculture
(USDA).
The CSREES fiscal year 2007 budget proposal is just over $1
billion. CSREES, in concert with the Secretary of Agriculture and the
intent of Congress, works in partnership with the land-grant university
system, other colleges and universities, and public and private
research and education organizations to initiate and develop
agricultural research, extension, higher education, and related
international activities to advance knowledge for agriculture, the
environment, human health and well-being, and communities. In addition,
CSREES implements grants for organizations to better reach and assist
disadvantaged farmers and ranchers in accessing programs of USDA. These
partnerships result in a breadth of expertise that is ready to deliver
solutions to problems facing U.S. agriculture today.
The fiscal year 2007 CSREES budget request aligns funding and
performance with the USDA strategic goals. CSREES manages its many
budget elements in support of research, education, extension, and
outreach programs as part of a cohesive whole supporting all six of the
Department's strategic goals. The Agency defines distinct performance
criteria, including strategic objectives and key outcomes with
identified annual targets. As part of an integrated budget and
performance process, CSREES conducts periodic portfolio reviews by
external experts to monitor overall program progress, suggest
alternative approaches, and propose management improvements.
In support of the Administration's commitment to ensure that
Federal funds are used to support the highest quality research, the
fiscal year 2006 Budget proposed to increase overall funding for
competitive peer reviewed research and reduce funding for formula grant
programs that do not allocate funds based on a competitive process.
Extensive analysis of the stakeholder response to the proposal
indicated that primary concerns included the lack of consultation with
affected universities and stakeholders, loss of matching funds, program
continuity and length of awards, sustaining breadth of capacity in
agricultural science and education nationwide, providing responsiveness
to State and local issues, and leveraging and sustaining partnerships
across institutions.
In response to the concerns, CSREES proposes a new initiative that
supports the Administration's belief that the most effective and
flexible way to fund research projects is through peer reviewed
competitive awards that address national issues, while at the same
time, responds to stakeholder concerns and still retains overall
funding at enacted levels. CSREES recognizes that multi-state programs
have been an effective part of the portfolio of work funded through the
Hatch formula, assuring focused, non-duplicative, collaborative,
problem-solving science. This program lends itself to national peer
review. To achieve the goals of expanding competitiveness and peer
review, we propose an approach that would expand and continuously
recompete the multi-state awards of the Hatch Act program; and
establish a similar, though separately authorized, program for
McIntire-Stennis Cooperative Forestry (McIntire-Stennis) funds.
In fiscal year 2007, CSREES is proposing to distribute a portion of
the Hatch Act and the McIntire-Stennis formula programs to nationally,
competitively awarded multi-state/multi-institutional projects based on
high priority national topics decided by CSREES in consultation with
our land grant partners. This new plan for multi-state programming
sustains the matching requirement and the leveraging of Federal funds.
It also allows institutions to focus on program strengths they identify
and sustain through linking local issues to broad national goals. The
Agency is eager to work with the agricultural experiment station and
university forestry research communities to develop an implementation
plan for the expanded multi-state/multi-institutional effort.
CSREES also will continue to distribute a portion of the Hatch Act
and McIntire-Stennis funds on the basis of the formula. The requested
$177 million of Hatch Act funds will support research at the SAES
related to producing, marketing, distributing, and utilizing crops and
resources; enhancing nutrition; and improving rural living conditions.
Funds will support research topics such as water and other natural
resources, crop and animal resources, people and communities,
competition and trade, and human nutrition. In addition, $22 million of
the funding requested for the McIntire-Stennis program will continue to
support research related to timber production, forest land management,
wood utilization, and the associated development of new products and
distribution systems. Both the Hatch Act and McIntire-Stennis programs
allow 5 year projects supporting the goal of continuity.
CSREES proposes to eliminate funding for the Animal Health and
Disease Program. Alternative funding from the National Research
Initiative (NRI) program could be used to support aspects of this
program. Recent, large Coordinated Agricultural Project (CAP) grants
have supported animal disease issues, such as Johnes Disease and Avian
Influenza.
CSREES continues to provide new opportunities for discoveries and
advances in knowledge through the NRI program. The fiscal year 2007
budget request of $247.5 million for the NRI is a strong statement of
the importance that the Administration places on competitively awarded
grants to advance knowledge for agriculture.
The NRI will continue to support current high priority programs
with an emphasis on critical issues. For example, under the NRI CAP,
multi-million dollar awards support multi-year large-scale projects to
promote collaboration, open communication, and coordinated activities
among individuals, institutions, States, and regions to address
priority issues of national importance. Under the NRI Animal
Biosecurity Program, CSREES is investing funds to support three animal
disease CAPs. CAP awards for Avian Influenza ($5 million/3 years with
18 States involved), Porcine Reproductive and Respiratory Syndrome
($4.4 million/3 years with 16 States involved), and Johne's Disease
($4.4 million/3 years with 21 States involved) are working to
accelerate research discoveries and the translation of basic and
applied research into significant outcomes that diminish the impact and
threat from these diseases. These projects provide a strategic
framework of objectives that integrate research, education, and
extension specialists representing academia, producers, veterinarians,
pharmaceutical and other biologics companies, Federal agencies, State
partners, and international institutions.
Under the Applied Plant Genomics Program in the NRI, CSREES
supports two CAPs--rice ($5 million/4 years representing 12 States) and
wheat ($5 million/4 years representing 17 States.) Activities under
these CAPs are working to bridge the gap between cereal grain genomics
and traditional breeding practices. The Project Directors for the CAPs
recently met to discuss facilitating synergistic activities across the
CAPs that will provide lasting benefits to U.S. agriculture through
improved varieties. Also discussed was how the U.S. public breeding
programs can capitalize on advances in genomics. The Agency also
continues support for a CAP focused on food safety at North Carolina
State University.
Expanded partnerships with other Federal agencies on research
topics of mutual interest will be possible with the increase in the NRI
funding. For example, research on plant genomics, in particular
sequencing of the soybean genome, will be supported through a
partnership with the U.S. Department of Energy. The research
collaboration will substantially contribute to advances in soybean
breeding, with great potential to improve the environmental and
nutritional quality of the plant, leading to improved efficiency of
production, reduced environmental impact, and healthier foods.
The NRI also will support research on animal genomics. Substantial
public investment in the Human Genome Project has led to technologies,
practices, and knowledge which enable cost-effective research in animal
genomics. The considerable similarities of the genomes of livestock
species, fish, and birds to that of human will reduce the need for
whole genome sequencing. An increase of $5 million in the NRI to
support domestic animal genomics including bioinformatics is requested.
CSREES proposes that $42.3 million from the Integrated Activities
account for programs that focus on water quality, food safety, methyl
bromide, organic transition, and pest-related programs be administered
through the NRI. This transfer is proposed as a means to streamline the
CSREES budget portfolio. Funding for these programs will be sustained
at the fiscal year 2006 levels.
Under the NRI, an increase of $1 million is requested for genomics
and biomass/biofuels that focus on the functional genomics and
bioinformatics of microorganisms to increase the efficiency of
biological conversion of pulp and paper products to bioenery and
biobased products and the development of new products including
biologically-based fuels. These efforts will tap into the power of
genomics to provide insights into new approaches for converting low
value, agricultural feedstocks to high value fuels and products.
An increase of $12 million is proposed to address emerging issues
in food and agriculture biosecurity under the NRI. The requested
funding will support research, education, and extension activities on
emerging pathogens and antibiotic production for animal protection and
biosecurity, and on microbial forensics of food safety pathogens.
In fiscal year 2007 an increase of $3 million is proposed under the
NRI for ecology and economics of biological invasions. The requested
funds will support projects that couple the economic predictions of
costs of prevention and control with ecological processes that govern
the entry, spread, and damage by invasive species.
Under the NRI, an increase of $3 million is proposed in fiscal year
2007 for plant biotechnology and water security. The funds will support
research on methods of modern molecular biology to improve the water
use-efficiency of crops, managed forests, and horticulture plants.
In continuing and expanding our efforts for agricultural security
and in support of the President's Food and Agriculture Defense
Initiative, CSREES, through cooperative efforts with the Animal and
Plant Health Inspection Service, has established a unified Federal-
State network of public agricultural institutions to identify and
respond to high risk biological pathogens in the food and agricultural
system. The network is comprised of 13 State animal diagnostic
laboratories and 6 plant diagnostic laboratories, strategically located
around the country. These 19 key laboratories are developing a two-way,
secure communications network with other university and State
Department of Agriculture diagnostic laboratories throughout their
respective regions. The diagnostic laboratories are responsible for
identifying, containing, and minimizing the impact of exotic and
domestic pests and pathogens that are of concern to the security of our
food and agricultural production systems. For example, the National
Animal Health Laboratory Network (NAHLN) with its 12 founding
laboratories in New York, Louisiana, Georgia, Texas, Wisconsin, Iowa,
Colorado, Washington, California, Arizona, North Carolina and Florida
continued efforts to enhance national preparedness against foreign
animal disease appearing in the United States by conducting activities
related to Avian Influenza (AI). AI is one of the new high-consequence
animal pathogens covered by the NAHLN protocols. In its efforts to
increase the ability to respond to outbreaks, NAHLN increased the
number of laboratories that can run the real time polymerase chain
reaction for AI using a standardized assay and protocol. Annual
proficiency testing is required of individuals conducting testing to
ensure quality results. The budget proposal requests an increase of
$2.1 million for a total of $12 million to maintain the current level
of diagnostic capabilities across the Nation.
CSREES proposes $5 million for the Agrosecurity Education Program
to support educational and professional development for personnel so
strengthen our national capacity to secure the Nation's agricultural
and food supply. The program will develop and promote curricula for
undergraduate and graduate level higher education programs that support
the protection of animals, plants, and public health. The program is
designed to support cross-disciplinary degree programs that combine
training in food sciences, agricultural sciences, medicine, veterinary
medicine, epidemiology, microbiology, chemistry, engineering, and
mathematics (statistical modeling) to prepare food system defense
professionals. Also proposed is $2.3 million for the Asian Soybean Rust
Program. The funds will provide stakeholders with effective decision
support for managing diseases of legume crops, particularly soybean
rust, to continue surveillance of sentinel plots.
CSREES continues to expand diversity and opportunity with
activities under 1890 base and educational programs, and 1994, insular
areas, and Hispanic-Serving Institutions educational programs. In
fiscal year 2007, the budget requests an increase of approximately $1.2
million for both the research and extension 1890 base programs. Funding
for our 1890 base programs provides a stable level of support for the
implementation of research and extension programming that is responsive
to emerging agricultural issues. Funding for the 1994 Institutions
strengthens the capacity of the Tribal Colleges to more firmly
establish themselves as partners in the food and agricultural science
and education system through expanding their linkages with 1862 and
1890 Institutions. Proposed funding for the Resident Instruction Grants
for Insular Areas Program will be used to enhance teaching programs at
higher education institutions located in U.S. insular areas that focus
on agriculture, natural resources, forestry, veterinary medicine, home
economics, and disciplines closely allied to food and agriculture
production and delivery systems. Continued funding for the Hispanic-
Serving Institutions promotes the ability of the institutions to carry
out educational training programs in the food and agricultural
sciences. This proven path of research, extension, and educational
program development rapidly delivers new technologies into the hands of
all citizens, helping them solve problems important to their lives.
CSREES also will continue to effectively reach underserved
communities through increased support for the Outreach and Assistance
for Socially Disadvantaged Farmers and Ranchers (OASDFR) Program.
CSREES will fund competitive multi-year projects to support outreach to
disadvantaged farmers and ranchers by providing grants to educational
institutions and community-based organizations to support these groups.
Funds for the OASDFR program will encourage and assist socially
disadvantaged farmers and ranchers in their efforts to become or remain
owners and operators by providing technical assistance, outreach, and
education to promote fuller participation in all USDA programs. CSREES
requests an increase of about $1 million for the OASDFR program.
The CSREES higher education programs contribute to the development
of human capacity and respond to the need for a highly trained cadre of
quality scientists, engineers, managers, and technical specialists in
the food and fiber system. The fiscal year 2007 budget provides a $.8
million increase in the Food and Agricultural Sciences National Needs
Graduate Fellowship program. This program prepares graduates to deal
with emerging challenges in such areas as agricultural biosecurity to
ensure the safety and security of our agriculture and food supply,
natural resources and forestry, and human health and nutrition,
including problems related to obesity such as diabetes and
cardiovascular health. Other higher education programs will provide
important and unique support to Tribal Colleges, the 1890 Land-Grant
Colleges and Universities, and the 1862 Land-Grant Universities as they
pilot important new approaches to expand their programs.
CSREES is requesting funds to accelerate and innovate the New
Technologies for Agricultural Extension (NTAE) to establish an
eXtension network which will offer Americans unparalleled access to
scientifically-derived and unbiased information, education, and
guidance. The fiscal year 2007 budget proposal includes a $1.5 million
increase for the NTAE Program to allow the Cooperative Extension System
to make available research-based education offered through eXtension to
a technology conscious Nation.
To ensure the highest quality research which addresses national
needs within available funding, the fiscal year 2007 budget proposes to
eliminate earmarked projects. Peer-reviewed competitive programs that
meet national needs are a much more effective use of taxpayer dollars
than earmarks that are provided to a specific recipient for needs that
may not be national. Based upon its broad scope, including the expanded
integrated authority, and proposed funding increase, alternative
funding from the NRI could be used to provide a peer-reviewed forum for
seeking and assessing much of the work funded through earmarks. For
example in the past four years, CSREES supported research in animal
identification and/or animal tracking under earmarked projects which
fit within the scope of the NRI. In addition, earmarked projects for
human nutrition and food safety also could fit within the program areas
of the NRI.
The fiscal year 2007 budget proposes changes in the general
provisions including increasing the amount provided for the NRI that
may be used for competitive integrated activities from up to 22 percent
to up to 30 percent. Also proposed is the elimination of the cap on
indirect costs for competitively awarded grants. In the past indirect
cost rate caps have resulted in recipients' inability to recover
legitimate indirect costs, thus penalizing recipients who choose to do
business with CSREES. This elimination allows full indirect cost
recovery under competitive awards and places CSREES competitive
programs on an equal footing with other Federal assistance programs, so
that top scientists will be more likely to apply for CSREES grant
programs.
CSREES consulted widely in the development of program goals and
budget priorities for fiscal year 2007. In discussions with the land-
grant university system, forestry researchers, and others, stakeholders
expressed their concerns over the approach to expand competitive
research grant programs. The President's fiscal year 2007 budget
proposal addresses their concerns, and is consistent with the view that
the most effective use of taxpayer dollars is through competitively
awarded grants that meet National goals. CSREES, in collaboration with
university and other partners nationwide, continues to enhance its
responsiveness and flexibility in addressing critical agricultural
issues. This proposal provides support for research, extension, higher
education, and outreach and assistance activities in the food,
agricultural, and human sciences that can make a difference in solving
problems facing the Nation.
Mr. Chairman, this concludes my statement. I will be glad to answer
any questions the Committee may have.
______
Prepared Statement of Susan E. Offutt, Administrator, Economic Research
Service
Mr. Chairman and members of the Committee, I am pleased to have the
opportunity to present the proposed fiscal year 2007 budget for the
Economic Research Service (ERS).
MISSION
The Economic Research Service informs and enhances public and
private decision making on economic and policy issues related to
agriculture, food, the environment, and rural development.
BUDGET
The agency's request for 2007 is $82.5 million, which includes
increases for two initiatives and pay costs. The agency is requesting
an increase of $5 million to develop an agricultural and rural
development information system that will monitor the changing economic
health and well-being of farm and non-farm households in rural areas;
and an increase of $1.6 million to continue the development of an
integrated and comprehensive data and analysis framework of the food
system beyond the farm-gate that will provide a basis for
understanding, monitoring, tracking, and identifying changes in the
food supply and in consumption patterns.
AGRICULTURAL AND RURAL DEVELOPMENT INFORMATION SYSTEM
In fiscal year 2007, ERS is requesting an increase of $5.0 million
to fund the Agricultural and Rural Development Information System, to
implement a comprehensive data collection and research program that
will monitor the changing economic well-being of farm and non-farm
households in rural areas. This initiative supports collection of
survey data from farm and non-farm households over time to analyze the
effects of policy adjustments in rural areas facing specific
development issues, such as persistent poverty or substantial out
migration. Data and analysis from this Agricultural and Rural
Development Information System will be critical to identifying the most
successful economic development strategies for different types of rural
areas, the adjustments that farm households and rural communities make
in response to agricultural policy changes, and the importance of the
linkages between farm and non-farm economies in assessing farm and
rural policy effects. The initiative also supplies the better and more
useful information on the status of farm, market, and rural economics
that USDA partners and customers seek.
The $5.0 million total amount requested would be allocated to four
specific sets of activities. The first, collecting longitudinal data
from rural households, will involve developing and supporting an
integrated set of surveys, which include core components to track
critical indicators over time as well as modules on specific topics
related to emerging policy issues. The second, collecting longitudinal
data from farm households, will build on USDA's Agricultural Resource
Management Survey (ARMS). The third will be to expand public internet
access to ERS agricultural and rural data. A portion of the initiative
funds would be devoted to providing State and local governments, trade
and commodity associations, other interest groups, and the public,
easy, interactive access to a new Agricultural and Rural Development
System. The fourth is to assure research capacity to analyze, interpret
and apply new agricultural and rural development information.
Data are not currently available to allow analysts to distinguish
the effects of rural development, farm, and agricultural resource
programs from one another, and from the myriad of other forces
affecting the economic well-being of farm and rural households. The
Census Bureau's Census of the Population provides information on rural
households within the context of their local area, but it does not
include a longitudinal component that allows assessment of individual
household response to changing policies and programs over time. The
American Community Survey will, in time, provide social and economic
data at the census tract level, but it does not use a longitudinal
framework to understand individual household change. Other data
sources, such as the Survey of Income and Program Participation, have a
longitudinal component but do not have sufficient detail or statistical
reliability to allow analyses of local rural area household response
for specific areas facing specific development challenges.
CONSUMER DATA AND INFORMATION SYSTEM
In fiscal year 2007, ERS is requesting an increase of $1.6 million
to augment the Consumer Data and Information System that was provided
funds in fiscal year 2006. New funding will be used to obtain data on
consumption of food away from home to improve the understanding of how
individuals make food choices. A major change in U.S. food consumption
patterns in the last several decades has been the increasing popularity
of foods consumed away from home. The importance of data on food-away-
home consumption for understanding food choices and nutritional
outcomes is growing, as Americans now spend about 50 percent of their
total food budget on food-away-from-home in 2004, up from 27 percent in
1962.
The additional funding requested this year supports ERS long-term
goals and objectives for research on food choices, including:
--Identifying differences in consumption of food away from home by
region and customer/household demographics (such as income,
education level, age, and presence of children in the
household);
--Measuring the effect of prices of food away from home on food
choices, by region and customer/household demographics;
--Assessing how low-income households differ in the away-from-home
food choices they make and the prices that they pay;
--Assessing how households' away-from-home food choices change
through consumers' life cycle. For example, households with
young children tend to favor fast food restaurants over sit-
down restaurants. Older Americans are known to eat out less
frequently than young adults; and
--Examining the extent by which convenience of eating away from home
is impact American's food choices.
USDA officials require timely information on food prices, product
movements, and potential consumer reactions to events to effectively
make commodity support decisions, provide nutrition education, and
ensure the safety of food. The components of the Consumer Data and
Information System already implemented with prior years' funding will
provide USDA with current food prices, sales volumes, food purchases, a
database on consumer characteristics and purchasing behavior, and the
ability to quickly survey consumer reactions, knowledge, attitudes, and
awareness on a host of issues. For example, we will be able to
determine how consumers respond to USDA's nutrition information
efforts, such as the Food Guide Pyramid and recommendations to increase
consumption of whole grains.
The Consumer Data and Information System has three major components
providing intelligence across and within the food and agricultural
complex. The Food Market Surveillance Report will provide policy
officials with the most up-to-date information on food prices,
purchases, and sales data publicly or privately available. This
information will improve USDA decision-making and provide data for
understanding consumer purchasing behaviors.
The Rapid Consumer Response Module will provide real-time
information on consumer reactions to unforeseen events and disruptions,
current market events, and government policies. The module question
will be asked of members of several proprietary consumer data panels
currently maintained by private vendors. The Rapid Consumer Response
Survey is awaiting OMB approval.
Using fiscal year 2005 and fiscal year 2006 funding, ERS has
continued development of the third major component of the Consumer Data
and Information System, the Flexible Consumer Behavior Survey (FCBS).
This survey will complement data from the National Health and Nutrition
Examination Survey (NHANES) by providing information needed to assess
linkages among individuals' knowledge and attitudes about food safety
and dietary guidance, their economic circumstances, their food-choice
decisions, and their nutrient intakes. Combining the NHANES with this
new survey allows analysis of how individual behavior, information, and
economic factors affect food choices, dietary status, and health
outcomes. The FCBS is scheduled to appear on the 2007-2008 NHANES with
research data available in 2009.
ERS CONTRIBUTIONS TO MISSION AREA GOALS
ERS supports the six USDA strategic goals to: (1) enhance
international competitiveness of American agriculture; (2) enhance the
competitiveness and sustainability of rural and farm economies; (3)
support increased economic opportunities and improved quality of life
in rural America; (4) enhance protection and safety of the Nation's
agriculture and food supply; (5) improve the Nation's nutrition and
health; and (6) protect and enhance the Nation's natural resource base
and environment.
Goal 1: Enhanced International Competitiveness of American Agriculture
ERS helps the U.S. food and agriculture sector adapt to changing
market structures in rapidly globalizing, consumer-driven markets by
analyzing the linkages between domestic and global food and commodity
markets, as well as the implications of alternative domestic and
international policies on competitiveness. ERS economists analyze
factors that drive change in the structure and performance of domestic
and global food and agriculture markets; provide economic assessment of
structural change and competition in the agricultural sector; analyze
the price impacts of evolving structural changes in food retailing;
analyze how international trade agreements and foreign trade
restrictions affect U.S. agricultural production, exports, imports, and
income; and provide economic analyses that determine how fundamental
commodity market relationships are adjusting to changing trade,
domestic policy, and structural conditions. ERS will continue to work
closely with the World Agricultural Outlook Board (WAOB) and USDA
agencies to provide short- and long-term projections of United States
and world agricultural production, consumption, and trade.
In 2006, several initiatives are increasing the timeliness and
availability of data and information, while simultaneously saving staff
time. We are increasing the transparency of our commodity projections
processes, and automating calculations where possible, and embedding
them within databases. Our goals are to: (1) make the work transparent,
inviting critique from both internal and external users; (2) transition
to fewer outlook analysts as retirements near, and (3) increase
timeliness in the release of data. Our redesigned feedgrains database
provides a wider range of data with automatic updates from our ongoing
commodity analysis reports. A new database on base acres allows users
to download and map county-level farm program and planted acreage data
for nine major program crops.
Large developing countries--such as China, India and Brazil--are
becoming more important to U.S. agriculture. China is one of the top 10
markets for U.S. agricultural exports and is the world's largest
producer and consumer of a range of commodities. ERS research continues
to examine key factors that will shape the size and pattern of China's
agricultural trade: water scarcity, implementation of WTO commitments,
changes in Chinese consumers' demand for food, and new directions in
agricultural policy and investment in agriculture and rural areas. ERS'
China briefing room on our website provides access to a new queriable
Agricultural and Economic database containing information on
agricultural production, food consumption, price indices, macroeconomic
information and industrial output. India's strong economic growth and
rising middle class are creating new markets for agricultural products.
ERS research examines the policy environment and prospects for growth
in key commodity markets, such as cotton, oilseeds, poultry and apples.
Food price determination is increasingly important for
understanding domestic and international markets and opportunities to
promote U.S. agriculture. ERS food markets research focuses on
enhancing knowledge and understanding of food prices, both their
objective measurement and how they are set by firms at different stages
of the food system. ERS has begun to use micro-level household and
store scanner data to measure the impact of changing store formats on
food prices in order to focus on the changing economic environment and
how these changes could affect customers' retail food purchasing
habits.
ERS will continue to work closely with the Foreign Agricultural
Service (FAS) and the Office of the U.S. Trade Representative to ensure
that ongoing negotiations on the Doha Development Agenda under the
auspices of the World Trade Organization (WTO) and regional trade
agreements are successful and advantageous for U.S. agriculture. The
demands of developing countries for sharp cuts in domestic agricultural
policies, along with exemptions that would limit the opening of their
markets, serve as stumbling blocks to reaching an agreement in current
WTO negotiations. ERS has developed new analytic tools, including its
PEATSIM (Partial Equlibrium Trade Simulation) modeling framework, to
provide more detailed analysis of the global benefits of trade
liberalization. It has also completed studies of important issues
affecting developing countries, including preferential trade agreements
and forces shaping global cotton markets after the end of the
Multifiber arrangement.
Goal 2: Enhanced Competitiveness and Sustainability of Rural and Farm
Economies
ERS provides assessment of the effects of farm policy on commodity
markets and the food and agricultural sector. For example, the 2005
USDA report, The 20th Century Transformation of U.S. Agriculture and
Farm Policy provides perspective on the long-term forces that have
helped shape agricultural and rural life and considers the extent to
which farm policy design has or has not kept pace with the continuing
transformation of American agriculture. ERS is also preparing a series
of nine commodity background studies to augment information available
to policy decision makers.
Changes in U.S. farm structure can have wide-ranging impacts on
agricultural productivity, opportunities for farm operators, and the
distribution of benefits from government programs. ERS research focuses
on two elements of change: the widespread shift of production to larger
farms, and the growing use of formal contracts between farmers and
buyers, used to guide farm production and marketing decisions. An
updated Family Farm report will be released in 2006, as well as an
Economic Brief detailing the impact of structural change on the
distribution of Federal commodity payments.
ERS recently released a report, using 2003 data, on the growing use
of agricultural contracts (Agricultural Contracting Update: Contracts
in 2003). For producers, contracting can reduce income risks of price
and production variability, ensure market access, and provide higher
returns for differentiated farm products. For processors and other
buyers, vertical coordination through contracting is a way to ensure
the flow of products, obtain differentiated products, ensure
traceability for health concerns, and guarantee certain methods of
production. But widespread contract use can also limit the efficiency
of cash markets, and under certain circumstances contracts can allow
buyers to extend market power. A September, 2005 ERS report (Did the
Mandatory Requirement Aid the Market? Impact of the Livestock Mandatory
Reporting Act) examined the effects of expanded price reporting
requirements on contract and cash markets for cattle.
Current research is examining the effects of contract use in hog,
dairy, and poultry sectors. For example, ERS research has found that
marketing contracts between packers and producers can facilitate
industry efforts to address pork quality needs by reducing measuring
costs, controlling quality attributes that are difficult to measure,
facilitating adaptations to changing quality standards, and reducing
transaction costs associated with relationship-specific investments in
branding programs.
Organic farming continues to be one of the fastest growing segments
of U.S. agriculture and can potentially enhance environmental
protection, as well as economic opportunities for producers.
Appropriations received in fiscal year 2005 and fiscal year 2006 will
enable ERS to continue to explore in greater depth the market for
organic products and the performance of organic farm sectors. In 2005,
ERS hosted an interagency USDA workshop on organic agriculture which
assessed producer options and obstacles in adopting organic farming
systems, and evaluated new developments in organic marketing and
technology. Also in 2005, ERS began adding a targeted sample of organic
producers to the USDA Agricultural Resources Management Survey (ARMS).
The first of these enhanced ARMS surveys, targeting organic dairy
producers, will be administered in 2006, and will be followed by an
over sample of organic soybean producers in the subsequent ARMS survey.
Survey data for both organic and conventional operations will enable,
for the first time, a side-by-side comparison of the profitability,
productivity, energy efficiency, and other economic characteristics of
these farms.
The Agricultural Resource Management Survey (ARMS) helps support
important estimates, analyses, and research produced by ERS. Two key
uses of ARMS are to underpin estimates of income and value-added that
are provided to the Department of Commerce for use in preparing the
U.S. national accounts, and to produce estimates of income for
different types of commercial-size farm businesses, such as those that
produce program crop commodities, that were required by the Congress in
the 2002 Farm Bill. Data from ARMS are used in a collaborative effort
between ERS and the National Agricultural Statistics Service to measure
annual production expenses in U.S. agriculture.
A special emphasis of ARMS in 2006 is to measure use of purchase
practices and strategies by farm managers in acquiring production
inputs, including energy-based inputs such as fertilizers, chemicals,
and fuels. These data will be used to help provide a broader
understanding of how changes in inputs costs affect different types of
farms and areas of the country. Additional funding provided for ARMS in
fiscal year 2003 was used to increase the number of farm businesses
included in the ARMS sample and to more effectively disseminate annual
survey results to data users. In the 2005 calendar year survey, now in
the field to be enumerated, about 34,000 farmers will be interviewed
nationwide. The larger sample for ARMS gives us greater confidence in
income and financial measures produced for the and geographic areas,
and for types and sizes of farms engaged in U.S. agriculture. ERS
continues to focus on improving the dissemination of ARMS data so that
annual survey results are more readily available and easily accessible
to data users, while assuring that sensitive data are not disclosed.
The web-based, secure ARMS data retrieval and summarization tool,
implement in late 2004, has now been through a successful update with
release of the latest annual data in November, 2005. About 700 unique
data users access ARMS results through this web-based outlet each
month.
Goal 3: Support Increased Economic Opportunities and Improved Quality
of Life in Rural America
ERS assesses rural needs by examining the changing demographic,
employment, education, income, and housing patterns of rural areas.
Data from the 2000 Census and other Federal information sources provide
the most up-to-date information on the current conditions and trends
affecting rural areas, and provide the factual base for rural
development program initiatives. In 2006, the agency is continuing its
series of publications that report current indicators of social and
economic conditions in rural areas for use in developing policies and
programs to assist rural people and their communities. Rural America at
a Glance: 2006 and Rural Employment at a Glance, designed for a policy
audience, will summarize the most current information on these topics.
ERS research focuses on the determinants and consequences of
critical themes in contemporary rural America, including changing
population composition and industrial restructuring. One emerging rural
population trend is baby boomer migration as they retire. The oldest
members of the baby boom cohort are now 60 years old, just entering the
stage in their lives when they tend to migrate for retirement. The
growth of baby boomer populations in rural and small town America
depends on demographic, natural amenity, housing market, urban
proximity, and economic factors affecting their migration flows. ERS
will publish a report in 2006 analyzing the impact of these factors
during the 1990s, which will help policymakers and planners better
anticipate the likely increase in migration of baby boomers into rural
areas over the next 20 years.
ERS is examining the effects of industrial change on the geography
of low-skill employment. Today many rural labor market areas find
themselves in the midst of industrial transformation as regional,
national, and global forces reshape the geography of economic activity.
ERS research is addressing how the transformation of rural America from
an economy based on manufacturing and extraction to one based on
services and amenities has changed the prospects for workers with
limited skills and education. A recent ERS study analyzed trends in
rural low-skill employment in the 1990s and identified the industrial
and occupational components of this change. The findings suggest that
investment in education and training, rather than industrial targeting,
is a more effective approach to raising skill levels in the rural
economy. In 2006, ERS will publish a second report looking at the
regional variation in the rural shift toward a service economy, and in
the effects of this shift on low-skill labor demand. The expected
result is a better understanding of how global economic forces,
including broader trade liberalization and rapid technological change,
can affect rural communities and how Federal and local responses can
assist in the resulting restructuring.
Goal 4: Enhance Protection and Safety of the Nation's Agriculture and
Food Supply
In response to increased risks to the Nation's agriculture and food
supply due to bio-terrorism, ERS embarked on an ambitious project known
as Geo-Spatial Economic Analysis (GSEA). The GSEA system merges an
extensive Geographic Information System with the analytical expertise
of ERS's economists. The Security Analysis System for U.S. Agriculture
(SAS-USA), which is being updated and enhanced in 2006 under a
cooperative agreement with the Massachusetts Institute of Technology,
systematically ties all food supply processes from farm production,
food manufacturing, distribution of food products, to food consumption
in every region of the country and other non-agricultural sectors, such
as energy and services. The GSEA system is designed to serve as a
platform for collaborative analysis across agencies in USDA and with
appropriate groups in FDA and the Department of Homeland Security
(DHS). These capabilities mean that emergencies can be managed
efficiently and expeditiously by assessing vulnerabilities and
predicting outcomes. The first simulation system prototype will
completed this year as part of a joint project with the Army Corps of
Engineers, the Tennessee Valley Authority, and Oak Ridge National Lab
to improve our ability to measure the economic consequences in the food
and agricultural industries caused by transportation disruptions. In
support of broad USDA initiatives such as the National Plant Disease
Recovery System, the GSEA system will serve as a tool to improve
economic assessments of crop and animal disease outbreaks using
alternative control strategies.
As part of several national homeland security activities, ERS
continues to develop and expand the capacity to assess the impact of
accidental and intentional disruptions to our food and agricultural
system. This year ERS will provide access to the GIS platform for
selected staff in USDA and other government agencies. The GIS platform
allows analysts to quickly manage the county-level crop, livestock,
demographic and economic data needed to provide scope and context in
the event of an emergency. ERS staff are prepared to conduct the
complex economic analysis needed to assess the cost of securing our
food supply, which includes protecting production, processing,
distribution, and consumption of food and agricultural products. ERS is
working with the Homeland Security Office (HSO), Office of Risk
Assessment and Cost Benefit Analysis (ORACBA), Animal and Plant Health
Inspection Service (APHIS), and the Food and Drug Administration (FDA)
to improve tools for the analysis of disruption and disease mitigation
strategies that require both sound biological and economic analysis.
ERS has become well-known for its pioneering estimates of the
societal costs associated with foodborne illnesses due to E. coli and
other known pathogens. ERS and researchers from Harvard and the
University of Wyoming are collaborating to develop new methodologies
for more accurately eliciting and measuring the value of reductions in
health risk associated with foodborne pathogens. This project applies
state-of-the-art valuation methodologies to measure the benefits of
improving food safety. A survey conducted in 2004 presented respondents
with information on duration and severity of foodborne illness and
asked respondents how much they would be willing to pay for a food with
lower risk of foodborne illness. Another survey conducted in 2005
provided respondents with information about the likelihood of foodborne
illnesses and asked them about their food consumption and food safety
practices. Analysts will explore the linkage between food choices and
food safety information using the information obtained by this survey.
In the event that unsafe food enters the marketplace, public health
officials and food safety regulators ultimately rely on records
maintained by private industry and retailers to track the manufacture
and distribution of that food. Privately maintained traceability
bookkeeping records provide investigators with information on the
extent and distribution of a contaminated product--and on how to remove
such a product from distribution channels efficiently. The strength of
private traceability systems and the readiness of the food industry to
track and recall a contaminated product is important for safeguarding
the Nation's food supply. In 2006, ERS will continue work with
agricultural economists from the University of Arkansas to investigate
how various food companies in different industries handle product
recalls, the operation of designated recall teams, and the frequency
and results of mock recalls. The research will examine the type and
scope of information collected from auditing and certification
activities, characteristics of firms with recall practices, and the
proportion of firms in given sectors participating in auditing and
certification activities.
Goal 5: Improve the Nation's Nutrition and Health
ERS research has a major focus on the economic dimensions of
obesity, including understanding the societal costs of obesity,
explaining obesity trends among different demographic and income
groups, and assessing the benefits and costs of alternative options for
influencing Americans' food choices and dietary behaviors, including
roles for nutrition education and Federal food and nutrition assistance
programs. ERS investigated consumers' likely response to a tax on snack
foods a public health issues generated by rising U.S. obesity rates.
Findings suggest that the impacts on dietary quality from the tax are
small and negligible at the lower tax rates. If taxes were earmarked
for funding information programs, as several proponents suggest, taxes
would generate a revenue stream the public health community could use
for nutrition education.
In 2006, ERS is investigating the factors that influence consumers'
food choices when eating away from home using the NHANES data. This
research will focus on discovering consumer preferences, such as
convenience and entertainment that compete with healthy eating.
Information about these factors help social marketers design effective
campaigns to influence consumers' away from home eating behavior.
Whether the poor pay more for food than other income groups matters to
their nutrition and health; therefore, the operating costs of the
stores at which they shop matter. An ERS study found overall operating
costs of stores with high food stamp redemption rates are not
significantly different from those of stores with moderate redemption
rates. If the poor do pay more, factors other than operating costs are
likely to be the reason.
ERS is currently conducting a study of the economic factors
affecting the cost of infant formula and rebates issued to the Special
Supplemental Nutrition Program for Women, Infants, and Children Program
(WIC). Over half of all infant formula sold in the United States is
purchased through USDA's Special Supplemental Nutrition Program for
Women, Infants, and Children (WIC). In fiscal year 2004, WIC State
agencies obtained $1.6 billion in rebates from infant formula
manufacturers for formula purchased through WIC. In recent years, some
States awarding new infant formula contracts have seen a marked
decrease in the size of the rebate. As a result, concern has been
raised that the cost to the States of providing infant formula to WIC
participants is increasing, a result that if sustained, could have far-
reaching negative implications for the WIC program A final report will
be released in 2006.
ERS continues to monitor U.S. households' food security--their
access to enough food for active, healthy living--and the extent and
severity of food insecurity. ERS funds a national food security survey,
conducted by the Census Bureau, and reports annually on the food
security of the Nation's households. The Committee on National
Statistics (CNSTAT) of the National Academy of Sciences will complete
its review, funded by ERS and USDA's Food and Nutrition Service, of the
methods and procedures that underlie the current measures of food
security. ERS will lead USDA's work to enhance and strengthen these
methods for monitoring, evaluation, and related research purposes
pursuant to CNSTAT findings and recommendations.
As part of our effort to improve the timeliness and quality of the
Department's food consumption data, in 2003 ERS launched an interagency
effort to develop a proposal for an external review of USDA's food
consumption data needs and gaps. Enhancements to the food consumption
data infrastructure are critical to understanding and addressing many
market and policy issues in the Department. The interagency effort led
to the funding of a review by the National Research Council's Committee
on National Statistics. The Committee issued its final report in 2005,
which included several recommendations. An interagency working group
has been established to take responsibility for the systematic
development and use of diet and food consumption data to address policy
and research questions of the Federal Government, as recommended by the
Committee. ERS is participating in this working group, which will
consider priorities and methods for obtaining additional food and
nutrition-related data in the National Health and Nutrition Examination
Survey. As recommended by the committee, ERS is also evaluating the use
of data on food purchases, prices, and consumption from proprietary
retail scanner systems, household scanner panels, and household
consumption surveys. This evaluation will examine the quality of the
data, consider ways to reduce the cost of access to the data, and
determine the highest priority applications for the information.
Goal 6: Protect and Enhance the Nation's Natural Resource Base and
Environment
ERS continues to provide comprehensive information to public and
private users on programs in the Conservation Title of the Farm
Security and Rural Investment Act of 2002. The ERS report, Flexible
Conservation Measures on Working Land: What Challenges Lie Ahead?
released in 2005, deals with the complexities associated with the
design of working-land payment programs. Program design and
implementation will largely determine the extent to which environmental
goals are achieved, and whether they are achieved cost-effectively.
Empirical analysis also shows how the environment, commodity prices,
and farm incomes could be affected by alternative designs.
In the course of the production of food and fiber, agriculture also
produces many by-products (positive externalities) such as open space,
recreational amenities, scenic views, groundwater recharge, and
wildlife habitat. Historically, the standard policy practice has been
to address each externality through a separate policy instrument.
However, when the transaction costs of administering policies (e.g.,
information gathering, contract formulation, enforcement) are positive,
using one instrument to address each externality or objective may not
be optimal. Using an empirical analysis focusing on the CRP, the ERS
report The Multiple Objectives of Agri-Environmental Policy, to be
released in 2006, explores the extent to which environmental attributes
may be jointly produced, e.g., efforts to reduce soil erosion may also
reduce nutrient runoff and increase soil carbon, with implications for
simultaneously targeting multiple environmental and cost objectives.
Furthermore, applying environmental policies in an uncoordinated
fashion fails to account for interactions among environmental mediums
(i.e., air, land, water). This can result in conflicting policies, in
that addressing one environmental problem can make another worse. The
ERS report, Manure Management for Multimedia Environmental Improvement:
A Comparison of Single Media versus Multi-Media Policy Optimization,
released in 2005, provides a concrete example of the tradeoffs of
alternately and simultaneously meeting air and water quality
objectives, in terms of farmers' costs, production decisions, and
environmental indicators, by focusing on livestock and poultry
production. Among the results in the report is that, if enacted,
restrictions on ammonia emissions from concentrated animal feeding
operations could increase the cost of meeting Clean Water Act
regulations for spreading manure.
In 2006, ERS will release an update of its popular Agricultural
Resources and Environmental Indicators report, which describes trends
in resources used in and affected by agricultural production, as well
as the economic conditions and policies that influence agricultural
resource use and its environmental impacts. Each chapter provides a
concise overview of a specific topic with links to sources of
additional information.
In fiscal year 2005, ERS continued the Program of Research on the
Economics of Invasive Species Management (PREISM) that was initiated in
fiscal year 2003. PREISM supports economic research and the development
of decision support tools that have direct implications for USDA
policies and programs for protection from, control/management of,
regulation concerning, or trade policy relating to invasive species.
Program priorities have been selected through extensive consultation
with APHIS, the Office of Budget and Program Analysis (OBPA) and other
agencies with responsibility for program management. In 2004 and 2005,
APHIS used an ERS-supplied pest ranking decision tool to determine
which pests would be on its Federal-State Cooperative Agricultural Pest
Survey list, making transparent the basis for selecting the pests for
which State cooperators could receive targeted pest surveillance and
detections funds. The recent and rapid spread of the pathogen, soybean
rust (SBR), in South America prompted ERS, in April 2004, to publish a
study of the potential economic impacts and policy impacts of its
windborne entry into the United States, Economic and Policy
Implications of Wind-Borne Entry of Asian Soybean Rust into the United
States. USDA used this study to refine rapid response strategies to SBR
entry, which was confirmed by APHIS in November 2004. ERS built on this
work to examine the value to producers of USDA's coordinated framework
to detect and report the presence of Asian soybean rust in different
producing areas in The Value of Plant Disease Early-Warning
Information: USDA's Soybean Rust Coordinated Framework, to be published
in 2006.
In addition to ERS-led analyses of invasive species issues, PREISM
has allocated about $3.6 million in extramural research cooperative
agreements since fiscal year 2003 through a peer-reviewed competitive
process. These agreements and their accomplishments through 2005 are
documented in a new report, Program of Research on the Economics of
Invasive Species Management: Fiscal 2003-2005 Activities. PREISM-funded
projects are developing analytical tools to address Federal and State
decision issues such as trade regulation, design and choice of
exclusion policies, and the selection of options or strategies to
manage plants pests and animal diseases. For example, researchers from
Virginia Polytechnic Institute developed a framework and assisted APHIS
in analyzing the impacts of a trade regulation to allow imports of
avocados from approved orchards and packers in the state of Michoacan,
Mexico. The economic model, analysis, and responses to public comments
were published along with the new avocado regulation in the Federal
Register (Nov. 30, 2004). To share and review progress made by
cooperators who received PREISM funding, and to provide a forum for
dialogue on economic issues associated with agricultural invasive
species, ERS organized workshops in 2004 and 2005, each with about 100
attendees from academia and Federal agencies. Among the projects funded
in fiscal year 2005 were studies of the value of animal traceability
systems is managing contagious animal diseases, the economic effects of
phytosanitary barriers to U.S. seed exports, and the benefits and costs
of policy options to manage risks associated with commercial imports of
non-native nursery stock.
CUSTOMERS, PARTNERS, AND STAKEHOLDERS
ERS shapes its program and products principally to serve key
decision-makers who routinely make or influence public policy and
program decisions. This clientele includes White House and USDA policy
officials and program administrators/managers; the U.S. Congress; other
Federal agencies, and State and local government officials; and
domestic and international environmental, consumer, and other public
organizations, including farm and industry groups interested in public
policy issues.
ERS depends heavily on working relationships with other
organizations and individuals to accomplish its mission. Key partners
include: NASS for primary data collection; universities for research
collaboration; the media as disseminators of ERS analyses; and other
government agencies and departments for data information and services.
Examples of successful partnerships with other agencies include
conservation policy design (NRCS), creating a component to the National
Health and Nutrition Examination Survey (FNS, Center for Policy and
Promotion, along with the Department of Health and Human Services), and
the economics of invasive species management (APHIS). ERS augments its
research capacity with 93 cooperative agreements, 14 research grants,
and 26 Memorandums of Understanding (MOUs).
CLOSING REMARKS
I appreciate the support that this Committee has given ERS in the
past and look forward to continue working with you and your staff to
ensure that ERS makes the most effective and appropriate use of public
resources. Thank you.
ADDITIONAL COMMITTEE QUESTIONS
Senator Bennett. Thank you. Thank you all for your
testimony.
We will have some written questions for you, but we
appreciate your service and appreciate your appearing here
today.
[The following questions were not asked at the hearing, but
were submitted to the Department for response subsequent to the
hearing:]
Questions Submitted by Senator Robert F. Bennett
CAPITAL SECURITY COST SHARING PROGRAM
Question. The Department of State requires all agencies with an
overseas presence in U.S. diplomatic facilities to pay a share of costs
through the Capital Security Cost Sharing Program. The fiscal year 2007
budget request for the Foreign Agricultural Service (FAS) includes $2.9
million for this program. What assurances have you received from the
State Department that FAS is paying for space that they actually
occupy? Is the agency currently paying for space in facilities where
they do not have a presence?
Answer. The State Department has not provided any specific
assurances that FAS will actually occupy the space for which we are
billed; however, they are working very closely with the affected
agencies. Currently, the State Department depends on several databases
and a data call issued to Posts to collect personnel data. Once the
data is collected, FAS reviews the results and verifies each position.
If the State Department numbers differ from ours, we will file an
appeal.
The fiscal year 2007 Capital Security Cost Sharing Program is
estimated to require an additional $2.9 million over the fiscal year
2006 costs for a total of $6 million.
RISK MANAGEMENT AGENCY--CROP INSURANCE
Question. The fiscal year 2007 budget request includes two new
legislative proposals for the crop insurance program. One proposal
would tie farm payments to the purchase of crop insurance protection at
50 percent or higher of their expected market value. The other proposal
would allow for a new participation fee that would generate funding for
information technology improvements. Please explain both legislative
proposals.
Answer. The first legislative proposal would provide savings to
reduce the Federal deficit while increasing participation in the
Federal crop insurance program. The proposal contains several key
features that, in combination, are expected to save about $140 million
on an annual basis. The proposal is identical to last year's deficit
reduction proposal which was not enacted by Congress. The proposal's
specifics are summarized below.
--The proposal would require any farmer that receives a Federal
commodity payment for his/her crop to buy crop insurance at a
minimum coverage level of 50/100. This is intended to ensure
farmers have adequate protection in the event of a natural
disaster without resorting to ad hoc disaster assistance.
--The proposal reduces premium subsidies by stated percentages points
for buy-up coverage levels.
--The proposal modifies the administrative fee on CAT to equal the
greater of $100 or 25 percent of the imputed CAT premium,
subject to a maximum fee of $5,000. This change would make the
administrative fee more equitable between small and large
producers.
--The proposal would also lower the imputed CAT premium rate by 25
percent.
--Finally, the proposal reduces the A&O reimbursement on all buy-up
coverage by 2 percentage points and increases the net book
quota share to 22 percent, but provides a ceding commission to
the companies of 2 percent.
The second proposal is to provide the authorization for a
participation fee. The participation fee would be used to help fund the
modernization and maintenance of the Risk Management Agency's computer
systems. The proposed fee would initially be used, beginning in 2008,
to fund modernization of the existing information technology (IT)
systems and would supplement the annual appropriation provided by
Congress. Subsequently, the fee would be shifted to maintenance and
would be expected to reduce the annual appropriation. The participation
fee would be charged to insurance companies participating in the
Federal crop insurance program; based on a rate of about one-half cent
per dollar of premium sold. Because it is the companies that will most
benefit from better, more advanced computer systems, it is reasonable
that they contribute to the modernization and maintenance of these
systems. The fee is expected to generate an amount not to exceed $15
million annually.
Question. Will the implementation of the proposal to tie payments
to higher levels of crop insurance eliminate the need for ad hoc
disaster assistance to farmers?
Answer. Much of the demand for ad hoc disaster assistance is
believed to be driven by producers who do not purchase crop insurance,
or who purchase catastrophic (CAT) coverage. CAT coverage provides a
maximum indemnity of only 27.5 percent in the event of a total loss.
The low coverage level for CAT has produced significant pressure for
additional relief. Linking eligibility for farm program payments to the
purchase of buy-up levels of crop insurance should mitigate some of the
demand for ad hoc disaster assistance as a much larger percentage of
the losses experienced by producers will be covered by the Federal crop
insurance program.
Question. Also, in regard to the one half cent per dollar on
premiums, when was the last time this type service fee was increased or
has the cost of participating in the program been set for a number of
years?
Answer. The fiscal year 2007 budget proposes a ``new''
participation fee designed to help pay for the modernization and
maintenance of the Risk Management Agency's computer systems. The
participation fee to be paid by insurance companies, will generate
funds estimated to be consistent with similar past Agency budget
requests. The participation fee will initially supplement the existing
appropriation to support improved IT systems for the many new programs
and program enhancements occurring within the Federal crop insurance
program. Modernization is expected to take about 2 years to complete,
after which the participation fee will be available to reduce the need
for appropriated funding. The Federal crop insurance program has seen
substantial growth over the past several years, yet the Agency's IT
budget has remained constant. Modernization of the RMA IT system is
critical in light of the existing systems reaching the end of their
expected useful life. The modernization system will provide substantial
benefits to the participation insurance companies and will improve
RMA's ability to comply with Congressional mandates regarding data
mining and data reconciliation/data sharing with the Farm Service
Agency.
CODEX AND TRADE CAPACITY BUILDING
Question. USDA has publicly stated that the vitality and science
based independence of the United Nations standard setting organizations
under FAO, specifically Codex Alimentarius and the International Plant
Protection Convention (IPPC) are critical to advance U.S. agricultural
trade objectives. A strong American policy presence within these
organizations is important to effectively represent U.S. agriculture
interests. Yet, concern has been raised by the U.S. industry that the
EU policy personnel, and consequently the EU influence, in those
organizations is far greater than the United States. For example, I
understand that of the 100 Associate Professional Officers (APOs) at
FAO, only one is from the United States. Can you speak to this issue
within the context of your $1.5 million budget request for trade
capacity building and explain how the requested budget is intended to
address this stated imbalance.
Answer. It is critical to place Americans in key positions within
international bodies like the CODEX and IPPC where they can influence
policies in crucial areas such as standard-setting. These bodies are
essential for implementing the Doha Development commitments. The APO
program is a useful tool for placing more Americans in international
organizations. Currently, the Netherlands funds about 30 APOs, Germany
11, Italy 9, and Spain 8. The advancement of science-based, decision-
making practices in agricultural trade is a well known U.S. priority.
The APO program, operating within organizations like FAO, not only
helps to increase U.S. influence in these bodies, but it also assists
developing member countries to build capacity to better participate in
standard-setting bodies, comply with international trade agreements,
and engage as full partners in global trade.
Part of the $1.5 million requested would be used to expand the APO
program and place at least one APO in the IPPC or CODEX secretariats,
where the United States currently has no representation. This would not
only allow the United States to quickly place competent Americans in
these increasingly important secretariats, but past experience has
shown that the APO program can also leverage additional resources from
the international organizations themselves as well as from other member
countries. For example, USDA provided $500,000 in funding for two APO's
to develop a pilot International Food Safety, Animal and Plant Health
portal at FAO. This initial funding has leveraged additional funding
from FAO, the Netherlands, Norway, and the Standards and Trade
Development Facility. The portal was launched at the 2nd Global Forum
of Food Safety Regulators in Bangkok in 2004. It provides a single
electronic access point for official information which increases
transparency in SPS measures and improves national laws and regulations
across the sectors of food and animal and plant health.
Another way USDA influences CODEX is through leadership on the
CODEX Commission as well as chairing and hosting various Committee
meetings. Ms. Karen Hulebak of USDA's Food Safety Inspection Service
(FSIS) was elected this year to serve as a Codex Commission vice-Chair.
Also, the U.S. Codex Office hosts meetings for three Codex Committees--
the committee on Food Hygiene, which FSIS also chairs; Committee on
Residues of Veterinary Drugs and Food; and the Committee on Processed
Fruits and Vegetables. In addition, FSIS provided an employee on a
temporary duty assignment for a year and a half to the Codex
Secretariat, who provided secretarial support to the group of
consultants making recommendations on Codex committee structure and
mandates, monitored contracts to translate standards into Chinese and
developed and edited FAO/Codex publications (e.g. ``Understanding
Codex'').
RESOURCE CONSERVATION AND DEVELOPMENT PROGRAM
Question. The fiscal year 2007 budget proposes to fund the Resource
Conservation and Development program at $25,933,000. This is a
reduction of $25,971,000 and 230 staff years. How was this level of
funding and staff years determined? What is your plan to allocate RC&D
coordinators? Will you evaluate the needs of each council before
allocating RC&D coordinators? Since many of the sponsors of these
councils are local governments, how will this budget affect USDA's
relationship with rural county commissioners and mayors?
Answer. The fiscal year 2007 President's Budget recognizes the
important role RC&D coordinators and councils play in protecting the
environment in a way that improves the local economy and living
standards. USDA's goal is to improve Federal efficiency and reduce
spending. The rationale for the RC&D proposal reflects the belief that
many councils will have the capacity to be more autonomous by fiscal
year 2007. An assessment leading up to the proposal included a review
of current RC&D Coordinator duties and responsibilities to find ways to
increase efficiency and reduce costs without reducing effectiveness.
Geographic considerations for remoteness and very large distances were
included in the overall proposal. The Budget assumes, on average, that
RC&D coordinators will serve multiple RC&D areas. Large geographic
distances and complexity in service area will be taken into
consideration.
NRCS is updating its analysis on the staffing impacts associated
with the President's Budget proposal. At the time the Budget proposal
was initially developed, the Agency estimated that up to 225 current
RC&D coordinators would need to be reassigned, without counting
potential retirements.
The plan to provide assistance through a federally funded RC&D
coordinator to each RC&D Council takes into consideration three
different factors. First, NRCS will conduct a business analysis that
takes into consideration current geographic considerations for
remoteness and very large distances to see if there could be some
effectiveness gained through this analysis. In addition, it is expected
that some RC&D coordinator positions would become vacant due to
attrition. Over the next 5-years, more than half the Federal workforce
is eligible to retire. This will create opportunities to once again
assess effectiveness and service needs. And lastly, there will be many
opportunities for promotions within the agency for existing RC&D
coordinators. RC&D employees possess a variety of highly skilled,
highly desirable, multi-disciplinary backgrounds and would have many
opportunities for promotion to other positions within the Agency. This
again would provide the Agency the opportunity to consider service and
effectiveness criteria on a case-by-case basis.
NRCS Regional Assistant Chiefs will work closely with State
Conservationists throughout their regions. Parameters for the number of
positions per State and Region will include an understanding of the
geographic attributes and needs associated with serving multi-
jurisdictions within the region, including the needs of each council.
USDA will continue to have a strong working relationship with rural
county commissioners and mayors. For several years, USDA has been
working with the National Association of RC&D Councils (NARC&DC) to
increase council capacity by providing resources, training and
expertise. By fiscal year 2007, many councils will be ready to take a
more active and autonomous role in addressing local concerns identified
in their area plans.
Examples of council capacity building tools used and/or available
include:
Publication of a manual for RC&D Council members entitled:
``Guidebook For RC&D Directors.'' This manual is designed to help
Council members carry out their personal and corporate responsibilities
in governing the RC&D area. This publication is available in hard copy
and can be downloaded from the NARC&DC website: www.rcdnet.org.
Training courses with accompanying information that include:
--RC&D (A Primer)
--What, Why & How (Basic Roles and Responsibilities)
--Organizational Capacity Building
--Nonprofit Financial Management
--Strategies for Stronger Associations
--Hiring 101
Development, publication, and dissemination of guidelines for rural
communities to use to recognize and respond to drought conditions.
National and regional workshops for RC&D Councils to increase
diversity from underrepresented individuals and groups in area plan
development and implementation.
National workshop or ``Forum on Entrepreneurial Development'' with
an emphasis on meaningful community economic development and
disseminate the information to RC&D Councils.
National conference on the utilization of alternative energy and
disseminate information to RC&D Councils.
WATERSHED PROJECT BACKLOG
Question. Please provide the status of the watershed project
backlog assessment that Bruce Knight mentioned in testimony in December
2005 before the House Committee on Agriculture. How long will it take
to complete this assessment? How much will this assessment cost? Which
account will fund this assessment?
Answer. The current watershed project unfunded list totals $1.8
billion. The funding provided for fiscal year 2006 will fund projects
where sponsors have acquired the necessary land rights and permits to
proceed with construction. In addition, there are some projects on this
list categorized as active that have been on the records for 40 years
or longer. Clearly it is time to work with local sponsors to assess the
viability of each individual project.
NRCS is committed to working with local project sponsors to
determine more accurately the viability of the potential watershed
project unfunded list. NRCS will assess the viability of unfunded
projects in two steps. First, we will use internal databases along with
employee and partner knowledge to determine which projects are clearly
active and viable. NRCS identified watershed projects that have not had
requests for implementation funding for the last 2 years or where the
NRCS state water resource long range plans do not indicate planned
implementation activity over the next 3 to 5 years. Second, for
projects that are not clearly active or viable, the sponsors will be
contacted to establish their continued interest in project
implementation. The sponsor's role in completing this effort will be
critical. Upon mutual agreement with the project sponsor, adjustments
to NRCS's watersheds database will be completed by each State to
reflect changes agreed upon with regard to project viability. This
effort is currently underway and will be completed by June 2, 2006.
The staff time associated with this effort will be minimal. To date
most of the assessment work has been completed through existing program
manager knowledge, phone calls and record checks. Depending on the
sponsor, additional individual case investigations for the assessment
could be completed with Watershed Surveys and Planning, and/or
Conservation Technical Assistance funds.
RAPID WATERSHED ASSESSMENTS
Question. How many watersheds have undergone the rapid watershed
assessment? In which states? In total how many watersheds will go
through these assessments? How much has been spent on these
assessments? From which account(s)? How have these assessments improved
conservation? Please give examples. How much will be spent in fiscal
year 2007 on these assessments?
Answer. Thirteen watersheds have been completed using the rapid
watershed assessment (RWA) approach in California, Oregon, and Idaho.
Georgia and Ohio have developed assessments similar to RWAs.
Approximately $390,000 has been spent on these assessments.
Individual states and local stakeholders decide if they will
conduct RWAs. NRCS currently anticipates the average cost of completing
a single RWA on an 8-digit hydrologic unit to be in the range of
$25,000 to $50,000. NRCS plans to mainly use Conservation Technical
Assistance Program funding to complete RWAs.
NRCS has been active with a variety of local, State and Federal
agencies as well as non-government organizations in developing RWAs in
the Klamath Basin. Through the use of rapid watershed assessments, NRCS
and stakeholders have more efficiently targeted specific conservation
measures to specific watersheds, ensuring the best use of available
program funds for securing permanent solutions to the issues related to
the quality and quantity of water.
The Upper Klamath Basin includes 271,700 acres of irrigated
agriculture. Based on a series of rapid watershed assessments, NRCS
determined that approximately 260,500 acres of these irrigated lands
need some level of conservation treatment including improvements to
existing irrigation systems. Also identified in the RWAs, the Lower
Klamath Basin has approximately 41,000 irrigated acres needing
treatment to improve irrigation water management. Through the RWA
process, local landowners were able to effectively address these
conservation issues and identify potential funding sources for
implementing irrigation improvements.
NRCS's Upper Klamath Rapid Watershed Assessment concluded improving
water quality and riparian habitat in Upper Klamath Lake and its
tributary streams would provide the greatest benefits to the Endangered
Species Act listed Shortnose and Lost River suckers. As a result of the
RWA, irrigation improvement practices were identified that would have
an impact in reducing the amount of warm, nutrient rich irrigation
tailwater that return to area streams. It identified additional wetland
and riparian habitat that needed restoring around the lake or along its
tributary streams, resulting in clean, cool water as well as spawning
and rearing habitat for endangered suckers.
Funding decisions have not been made for fiscal year 2007 regarding
the completion of additional RWAs.
COMMODITY SUPPLEMENTAL FOOD PROGRAM (CSFP)--PROGRAM ELIMINATION
Question. The budget request eliminates the Commodity Supplemental
Food Program, which serves 32 States, 2 Indian reservations, and the
District of Columbia. The elimination of this program results in a $108
million reduction from the fiscal year 2006 appropriation. Please
explain why you chose to eliminate this program. What will the
participants in CSFP do if the program is eliminated?
Answer. The President's fiscal year 2007 budget request proposes to
discontinue CSFP operations and transition eligible CSFP participants
to other nutrition assistance programs such as the Food Stamp Program
(FSP) and the Special Supplemental Nutrition Program for Women,
Infants, and Children (WIC Program). The CSFP is a relatively small
program which operates in limited areas of 32 States, two Indian
reservations, and the District of Columbia. In an era of fiscal
constraint, we face a difficult challenge with regard to discretionary
budget resources, and must ensure that those limited resources are
targeted to those programs that are available to needy individuals and
families, wherever they live.
If Congress adopts the budget request, we will work closely with
CSFP State agencies to ensure that any negative effects on program
participants are minimized and that they are transitioned as rapidly as
possible to other nutrition assistance programs for which they are
eligible.
We are requesting $2 million to provide outreach and to assist
individuals to enroll in the FSP. We also propose that elderly
participants who leave the CSFP upon the termination of its funding and
who are not already receiving FSP benefits will be eligible to receive
a transitional benefit worth $20 per month ending in the first month
following enrollment in the FSP under normal program rules, or 6
months, whichever occurs first. CSFP women, infants, and children
participants who are eligible for WIC Program benefits will be referred
to that program as appropriate.
FOOD STAMP PROGRAM--PARTICIPATION
Question. The budget request anticipates declining participation in
the Food Stamp Program. Specifically, overall participation is expected
to decrease by 1.1 million in fiscal year 2007. Can you take a moment
to explain why participation is declining and do you expect these
reductions to continue?
Answer. One of the key strengths of the Food Stamp Program is its
ability to adjust automatically to changing economic conditions. The
number of participants generally rises as the economy weakens and
unemployment and poverty increase, and falls as the economy grows.
Between January 2004 and January 2006, the unemployment rate fell from
5.7 percent to 4.7 percent, and the number of people working increased.
In 2005, program participation began to flatten before the Gulf Coast
hurricanes of the fall. As a result, we expect the number of food stamp
participants to decline between 2006 and 2007. We currently project
additional reductions through 2009, after which food stamp
participation is projected to be fairly flat.
SPECIAL SUPPLEMENTAL PROGRAM FOR WOMEN, INFANTS, AND CHILDREN (WIC)--
LEGISLATIVE PROPOSAL
Question. The fiscal year 2007 budget request includes a
legislative proposal to cap State nutrition services and administration
(NSA) grants at 25 percent. A savings of $152 million is assumed in the
budget for this proposal. Please explain this proposal. What is the
current NSA cap, and how will enacting this proposal further the goals
of the WIC program? If the legislative proposal is not enacted, does
the budget request fully fund the WIC program?
Answer. The cap on WIC NSA funding will be applied at the national
level. In other words, the funds available from the WIC appropriation
for grants to State agencies will be divided into two components: 75
percent of the available funds will be released to WIC State agencies
as food funds and 25 percent of the available funds will be for NSA.
The requested funding level for fiscal year 2007 would equally reduce
each State agency's NSA grant from the prior year's NSA grant level as
needed to ensure that the national total of funds allocated for NSA
stays within the 25 percent cap.
Currently, funds available from the WIC appropriation for grants to
States are divided between food and NSA funds to provide a nationally
guaranteed administrative grant per participant. During fiscal year
2006, 26.5 percent of available funds were provided for NSA.
SPECIAL SUPPLEMENTAL PROGRAM FOR WOMEN, INFANTS, AND CHILDREN (WIC)--
FOOD PACKAGE
Question. In April 2005, the National Academy of Sciences Institute
of Medicine released a report that recommended revisions to the food
package offered to WIC participants. The report recommends that
revisions to the food package encourage consumption of fruits and
vegetables, emphasize whole grains, lower saturated fat, and appeal to
diverse populations. In accordance with these recommendations, I
understand that a final rule updating the WIC food package will be
released at the end of 2006. Will the final rule be released at the end
of this year as required? I understand that the final rule will be cost
neutral, meaning that the total cost of the food package will not
change. Will keeping changes to the package cost neutral have an affect
on the overall make up of the food package?
Answer. Absent further delays, we fully anticipate that a proposed
rule can be published this summer. However, affording opportunity for a
full 90-day public comment period for this important rule may preclude
issuing an interim final rule within the 18-month statutory deadline of
November 2006.
Adding new items to the food package requires adjustments to
current items in the package. As such, the overall make up of the food
package would change.
MINORITY OUTREACH
Question. The Food and Nutrition Service provides outreach and
information on the programs it operates and dietary guidelines. What is
FNS doing to make sure these important messages are appropriately
targeted to minority populations, including the rapidly growing
Hispanic population in the United States? How much does FNS spend
annually on these information campaigns and specifically on minority
outreach?
Answer. For all of the major nutrition assistance programs, program
outreach and information materials are targeted to reach low-income
populations, including minority populations and those who speak Spanish
and other languages beyond English. This includes making program
application easier for non-English speakers by expanding the number and
types of products available in Spanish and other languages.
In food stamps, USDA's largest nutrition assistance program, FNS
identified three target populations for food stamp outreach
activities--seniors, the working poor, and immigrants. Each of these
groups contain large subsets of minority populations, including
Hispanics. These target populations were selected because they
represent populations that are hard to reach and have historically low
food stamp participation rates. FNS makes special efforts to reflect
cultural diversity in all outreach materials, tools, and resources
(including photos and cultural sensitivities) and to provide outreach
materials in multiple languages, whenever possible. Numerous outreach
materials are available in Spanish as well as English. In addition,
about six informational publications are available in more than 30
other languages. Food stamp outreach activities include:
--Posters, flyers, and brochures available in English and Spanish
featuring diverse families and individuals.
--Informational materials available in 35 languages.
--Collection of ``10 FSP Myths and Facts'' handouts for various
populations in English and Spanish.
--Television PSA available in English and Spanish.
--Toll free number offering information and service in English and
Spanish.
--Paid radio advertisements for the past 3 years in English and
Spanish.
--Award of small outreach grants awarded to community organizations
that serve immigrants and minority populations (every year
since 2001 with the exception of 2003).
--Photo gallery featuring images of outreach and nutrition education
for use by State and local outreach providers and featuring
diverse families and individuals.
--Food stamp pre-screening tool in English and Spanish.
In WIC, USDA developed the Fathers Supporting Breastfeeding
Project, which focuses on educating fathers about the benefit of
breastfeeding so that they may have a positive impact on a mother's
decision to choose to breastfeed. The primary target audience for this
project is African American males because African American females have
the lowest breastfeeding rates compared to other racial/ethnic groups.
USDA also recently launched the WIC Hispanic Breastfeeding Promotion
and Education Project to develop educational resources that
specifically address the barriers to breastfeeding for Hispanic WIC
participants.
USDA conducts a wide range of nutrition education and promotion
activities to motivate participants to improve their eating and
physical activity behaviors. Food and Nutrition Service (FNS) nutrition
education efforts are targeted primarily to participants or potential
participants in the nutrition assistance programs, rather than to the
general public. The Center for Nutrition Policy and Promotion (CNPP)
provides nutrition information for the general public. USDA makes the
development of materials that promote healthy food choices to the
Spanish-speaking community, in ways that are understandable and
culturally relevant, a critical priority. Key efforts include:
--Development of a comprehensive nutrition education initiative
targeting low-literacy and Spanish-language populations, to
help Food Stamp Program recipients and other groups served by
USDA to overcome their barriers to healthy eating and physical
activity behaviors, based on the Dietary Guidelines for
Americans. The materials are planned for release in 2007.
--Eat Smart. Play Hard. Materials in Spanish promote healthy eating
and physical activity, including activity sheets, bookmarks,
posters, and brochures. Over 2.4 million of these Spanish-
language materials have been ordered by program cooperators to
date.
--Development of Eat Smart, Live Strong, a behavior-focused nutrition
and physical activity intervention for able-bodied, low-income
seniors, 60-74 years old. The intervention focuses on two key
behaviors: increasing fruit and vegetable consumption and
physical activity.
--The Food Stamp Nutrition Connection (FSNC), an online resource
system designed to facilitate communication and resource
sharing among Food Stamp Nutrition Education providers. There
are 70 nutrition education materials written in Spanish on the
FSNC Web site, http://www.nal.usda.gov/foodstamp.
One of the main tenets and philosophies of CNPP's new MyPyramid
Food Guidance System was to personalize and individualize dietary
guidance. Upon the release of MyPyramid in April 2005, children and
Spanish speakers were the first two sub-groups of the U.S. population
to receive personalized attention. Within the year, USDA released
MyPyramid for Kids and MiPiramide, the Spanish-language version.
MyPyramid for Kids features Tips for Families in both English and
Spanish, an interactive computer game, posters, worksheets, and
classroom materials to help children learn about the benefits of
healthful diets and physically active lifestyles.
With the funds requested for 2007, the CNPP will seek expanded
translation of MyPyramid materials. We will also look for greater
message dissemination supported by culturally appropriate consumer
research and seek greater outreach through public/private partnerships.
Major FNS/CNPP nutrition education and information expenditures are
listed below:
FNS NUTRITION EDUCATION AND INFORMATION ESTIMATED EXPENDITURES
[In thousands of dollars]
------------------------------------------------------------------------
Fiscal year Fiscal year
Program 2006 2007
------------------------------------------------------------------------
Food Stamp Program...................... 262,900 263,004
Team Nutrition (for Child Nutrition 15,039 15,034
Programs)..............................
WIC Program (general nutrition education 305,599 290,510
and information).......................
WIC Program (breastfeeding promotion and 91,091 91,241
education).............................
Food Distribution Program............... 200 1,200
Other Nutrition Education............... 7,504 8,634
-------------------------------
TOTAL, FNS........................ 682,423 669,624
CNPP Nutrition Education and Information 2,865 4,898
Expenditures...........................
-------------------------------
Total, FNCS....................... 685,288 674,522
------------------------------------------------------------------------
Each fiscal year, FNS spends $8 million on national outreach
activities to promote the nutrition benefits of food stamps. As
described above, most all of our food stamp outreach activities touch
minority populations in some way. Thus, while it is not possible to
break out how much is spent on minority outreach specifically, we
believe that almost all of it is spent on program information
activities that impact minority populations.
FOOD DEFENSE--FOOD EMERGENCY RESPONSE NETWORK
Question. The fiscal year 2007 budget requests an increase of $15.8
million to expand the Food Emergency Response Network (also known as
FERN) and upgrade FSIS' laboratory capabilities for evaluating a
broader range of threat agents for food. A part of the President's food
and agricultural defense initiative, the Food Emergency Response
Network will be a national network of 100 laboratories for testing of
food samples for contaminants. The Food Emergency Response Network has
been an ongoing partnership with FSIS, FDA, and State laboratories
since fiscal year 2005. How many labs currently participate in FERN?
Where are they?
Answer. Currently, there are 26 laboratories actively participating
in FERN. Of these 26 laboratories, FSIS has cooperative agreements with
18 State laboratories to begin to build what is, at this time, a very
limited capacity to test for biological threat agents in food, while
the Department of Health and Human Services' Food and Drug
Administration has agreements with 8 State laboratories to develop
capacity to respond to chemical attacks on the food supply. Over 100
more laboratories have completed a checklist and volunteered to share
data with FERN.
FSIS has cooperative agreements with the following 18 State
laboratories to build a still very limited capacity to test for
biological threat agents in food:
------------------------------------------------------------------------
State Division
------------------------------------------------------------------------
Virginia.................................. Virginia Division of
Consolidated Laboratory
Services
Arkansas.................................. Arkansas Department of
Health
Delaware.................................. Delaware Health and Social
Services
Florida................................... Florida Department of
Agriculture and Consumer
Affairs
Hawaii.................................... Hawaii State Laboratories
Division, Department of
Health
Indiana................................... Indiana State Department of
Health
Massachusetts............................. Massachusetts Department of
Public Health, State Lab
Institute
Michigan.................................. Michigan Department of
Agriculture & Michigan
Department of Health
Minnesota................................. Minnesota Department of
Agriculture
Montana................................... Montana Department of Public
Health & Human Services
Nebraska.................................. Nebraska Department of
Agriculture
New Hampshire............................. New Hampshire Public Health
Laboratories
New Jersey................................ New Jersey Department of
Health and Senior Services
New York.................................. New York State Department of
Agriculture
Ohio...................................... Ohio Department of
Agriculture, Consumer
Analytical Lab
Rhode Island.............................. Rhode Island Department of
Agriculture
South Carolina............................ South Carolina Department of
Health & Environmental
Control
South Dakota.............................. South Dakota Animal Disease
Residue & Diagnostic Lab,
South Dakota State
University
------------------------------------------------------------------------
The Department of Health and Human Services' Food and Drug
Administration has agreements with the following 8 State laboratories
to develop capacity to respond to chemical attacks on the food supply:
------------------------------------------------------------------------
State Division
------------------------------------------------------------------------
Iowa...................................... University of Iowa
California................................ Regents of the University of
California
Arizona................................... Arizona Department of Health
Service
Connecticut............................... Connecticut Agriculture
Experimental Station
Virginia.................................. Virginia Division of
Consolidated Labs
Minnesota................................. Minnesota Department of
Agriculture
New Hampshire............................. New Hampshire Department of
Public Health
Florida................................... Florida Department of
Agriculture
------------------------------------------------------------------------
Question. How many labs do you hope to add with the increased
funding?
Answer. Using fiscal year 2005 funds, FSIS spread $1.2 million
between 18 laboratories with which the agency has cooperative
agreements. As a result, more funding is needed to make these labs
operational within FERN. An operational FERN lab is defined as a
laboratory that has developed the capability and demonstrated
proficiency to test meat, poultry, and egg products for 2-3 threat
agents, either as a screening test or a confirmatory test. It is
important to note that not all labs will test for the same threat agent
or agents. The request was for $15.8 million, $13 million of which will
go to build laboratory capacity and $2.8 million for electronic
communication in real-time between the laboratories for more rapid,
timely information sharing and response. With the $13 million FERN
request for fiscal year 2007, FSIS will be able to ensure that those
original 18 laboratories plus five additional laboratories are
operational FERN labs. Thus, by the end of fiscal year 2007 with the
funding requested, 23 State labs would be capable of operating in FERN
in the event of an intentional attack, an act of nature, or a hoax and
help USDA ensure product safety and consumer confidence in the food
supply.
FSIS also requests $2.5 million for two data systems to support
FERN: the electronic laboratory exchange network (eLEXNET), and a
repository of analytical methods. The eLEXNET is a nationwide, Web-
based electronic data reporting system that allows analytical
laboratories to rapidly report and exchange standardized data. This
system is currently operational in nearly 100 food-testing, public
health, and veterinary diagnostic laboratories across the country. The
funding will be used to make eLEXNET available to additional FERN and
other analytical, food-testing laboratories.
FSIS is working with FDA to develop a Web-based repository of
analytical methods compatible with eLEXNET. Access to these methods
will greatly enhance the ability of FERN and other laboratories to
respond to emergencies, to use new methodologies and technologies, and
to enhance efficiency. The requested funding will be used to enhance
the repository and to populate the repository with numerous methods
that will be obtained from analytical laboratories.
Question. What does USDA provide for the State labs with this
funding--staff, equipment, training?
Answer. FERN establishes the network of communication between
levels of government and ensures that all laboratories participating
have the necessary capacities and capabilities needed to respond to an
attack, act of nature, or hoax affecting the food supply. FERN enhances
the abilities of existing laboratories to perform procedures and tests
through training, proficiency testing, food defense exercises,
acquisition of new equipment, and the repository of validated methods.
FERN is able to offer these, and other, resources to the State and
local labs primarily through funding from cooperative agreements. No
staff years are provided with these funds.
Question. How, exactly, do the labs assist USDA in protecting the
food supply from a potential terrorist attack?
Answer. FERN enables FSIS to leverage State and local laboratories
for surge capacity in handling the numerous samples that would be
required in the event of an attack, act of nature, or hoax that affects
the food supply and to maintain product safety and consumer confidence
in the U.S. food supply. The request was for $15.8 million, $13 million
of which will go to build laboratory capacity and $2.8 million for
electronic communication in real-time between the laboratories for more
rapid, timely information sharing and response. The $13 million budget
request for FERN will enable the agency to manage, maintain, and expand
the capacities and capabilities of the existing FERN labs and bring new
labs into the network. The $2.5 million requested for eLEXNET and the
repository of analytical methods, will enhance the data systems
supporting FERN.
There are estimated to be over 50,000 food types and literally
thousands of biological, chemical, and radiological agents that can be
added to food that pose a threat to humans. Many different laboratory
analytical methods are needed to detect these agents. For a large
number of agent/food combinations, there are no proven or validated
methods. Part of the FERN effort will be to develop and validate these
methods and to provide the necessary equipment and training to the
member laboratories. Because there are such a large number of agent/
food combinations that may require testing, no single laboratory will
be able to respond to every threat. The mission of FERN is to develop
the capability and capacity of existing labs to respond to any type of
threat to food. Some analyses can be done at a rate of over 1,000 per
day while others are much slower, perhaps only 10 per day. The
laboratory capacity is dependent on the specific scenarios and the
specific threat agent involved. The goal of 100 State labs to be fully
functional under FERN is an estimate of the capacity necessary to
address many of the common foodborne threats agents in the vast array
of food matrices.
BUDGET REQUEST--CONSTRUCTION AUTHORITY
Question. The budget request includes $565,000, from current
resources, for construction of a laboratory receiving facility at an
Agricultural Research Service lab in Athens, GA. FSIS currently does
not have authority to construct facilities, and this is the first time
FSIS has requested such authority through the budget process. Why is
this sample receiving facility necessary and how will it benefit FSIS
operations and performance?
Answer. In the event of a food safety emergency, a sample receiving
facility that is separate and distinct from the laboratory in Athens,
Georgia, would be essential. For instance, if a hazardous material
arrived at the present sample receiving area, FSIS may have to shutdown
and decontaminate the entire laboratory. As a result, all incoming test
samples would be delayed while shipped to one of only two other FSIS
laboratories and in a food safety emergency, such delays could have a
serious impact on public health. The Agricultural Research Service
laboratories in the same building could also be shut down and need to
be decontaminated. Decontamination can be a long, tedious process. For
example, the Hart Senate Office Building was closed for a lengthy
period of time for decontamination. FSIS cannot afford to have its only
BSL-3 laboratory and a major ARS research laboratory closed for any
length of time. Thus, a separate sample receiving facility would enable
the laboratory to continue with its work, even if the receiving
facility was forced to shut down.
Question. If funding for the facility comes from current resources,
what current activities will be negatively impacted by this reduction?
Answer. No current essential public health activities would be
negatively impacted by the construction of a laboratory receiving
facility in Athens, Georgia. Only after the essential public health
needs are met will the agency consider using other available resources
to build the facility.
CODEX
Question. The work of the U.S. Government through Codex has been
critical in advancing trade in U.S. food and agriculture. So important,
in fact, that several years ago dedicated funding was identified to
support the U.S. Codex office. In fiscal year 2006, funding for Codex
through this appropriations bill is slightly more than $3 million. This
funding is intended, in part, for international outreach efforts with
other countries to advance U.S. policy positions. The U.S. food
industry has expressed concern that these dedicated resources are not
available for Codex outreach as intended but are being directed to
general FSIS program activities. Does your office provide an accounting
of how the Codex money is spent?
Answer. The U.S. Codex Office is part of the Office of the
Administrator for the Food Safety and Inspection Service (FSIS), which
provides funding and tracks expenditures for U.S. Codex Office
operations, outreach and representational events. The Manager of the
U.S. Codex Office reports directly to the Under Secretary for Food
Safety and keeps the Under Secretary informed about the status of the
U.S. Codex Office budget and expenditures.
Question. Are other organizations or initiatives, outside of direct
Codex work, being funded by this specific amount?
Answer. No, the funding provided will be used for activities
associated with the work of the Codex Alimentarius Commission and its
committees, task forces, and working groups.
Question. Please identify the international outreach programs for
fiscal year 2007.
Answer. The U.S. Codex Office manages a vigorous program of
outreach to developing countries, which involves co-hosting committee
meetings, organizing multi-day technical seminars on a variety of
issues, and inviting delegates from developing countries to meet U.S.
delegates at special, issue-specific workshops. These meetings provide
opportunities for Codex officials from developing countries to exchange
views with experts from the United States for the purpose of developing
working relationships and building confidence in the U.S. positions on
issues under negotiation.
One of the United States' on-going objectives is to broaden
participation in Codex, especially participation by developing
countries. Many of the least developed countries have varied levels of
food safety infrastructure, and participation in Codex by
representatives of these countries is largely disconnected from the
national experience. While the United States believes that capacity-
building activities should be funded and managed by other
organizations, the outreach program of the U.S. Codex Office can help
developing countries to set priorities for their participation in Codex
and identify specific objectives for building their capacity to
participate effectively in Codex negotiations.
Africa has become a priority for developing new working
relationships. On April 19-21, 2006, the U.S. Codex Office hosted a
technical seminar in Maputo, Mozambique for Codex contact points from
African countries. In 2007, the U.S. Codex Office will follow up on the
outcomes of this technical seminar.
The Latin American and Caribbean communities will continue to be
top priorities, and the U.S. Codex Office will build on the working
relationships existing with these countries to organize additional
outreach events, just as the U.S. Codex Office has organized events
with Latin America and the Caribbean in the previous 3 years.
Currently, the U.S, Codex Office is working with Argentina, Mexico, and
Brazil to organize a technical seminar with the member countries of the
Codex Committee for Latin America and the Caribbean (CCLAC), except
Cuba. Argentina holds the rotating presidency of CCLAC, Mexico is the
representative for Latin America and the Caribbean on the Codex
Executive Committee, and we propose to host this seminar with the
Brazilians in Rio de Janeiro, June 1-3, 2006. This seminar has two main
purposes: (1) to enhance the capacity of officials in Latin America and
the Caribbean countries to participate more effectively in meetings of
the Codex Alimentarius Commission and its Committees; and (2) to
strategize about potential new work and new directions for the Codex
Alimentarius Commission to respond to emerging food safety and trade
issues in which the United States and the CCLAC members have common
interests. The agenda features presentations and panel discussions with
U.S., Latin American and Caribbean experts, and experts will also be
invited from inter-American institutions (such as the Pan American
Health Organization (PAHO), the Inter-American Institute for
Cooperation on Agriculture (IICA)) and from the Food and Agriculture
Organization (FAO) and the World Health Organization (WHO) which are
the sponsoring organizations of the Codex Alimentarius Commission.
In addition, FSIS' Food Safety Institute of the Americas (FSIA),
established in October 2004 to improve food safety and public health
training throughout the Western Hemisphere, is promoting more effective
participation in the Codex Alimentarius Commission. The Western
Hemisphere has many shared interests in food safety, many of which are
raised in Codex. FSIA wants to assist these countries in becoming more
aware of these shared hemisphere interest, and encourage joint
scientific and unified responses in Codex by the hemisphere. FSIA will
do this by working with governments throughout the hemisphere to
establish permanent food safety and public health training programs in
each country at all educational levels--high school, university, and
graduate levels. FSIA has its own budget. No Codex funds are used for
FSIA activities.
Through FSIA, FSIS hopes to encourage countries to adopt the food
safety standards developed by Codex as minimum food safety standards
within their countries.
By building relationships throughout the hemisphere on a non-
regulatory basis, FSIA can improve trade and public health in the
hemisphere. With new trade agreements being implemented, FSIA has an
opportunity to work closely with these countries to provide a forum for
discussions about the food safety and public health needs of the
hemisphere. Scientifically based education and training need
improvement throughout the hemisphere, and by sharing information and
finding common solutions, we will all benefit.
FSIA provides training and education materials to educational
institutions throughout the hemisphere. Many excellent but
underutilized educational programs have been developed by international
and hemispheric organizations such as the PAHO, the IICA, the FAO, and
the WHO. FSIA promotes these types of existing programs.
HUMANE SLAUGHTER
Question. There are allegations that USDA does not adequately
inspect the transport and slaughter of horses. Please comment on the
adequacy of USDA's effort for both of these critical functions.
Answer. Under USDA's Slaughter Horse Transport Program (SHTP),
administered through the Animal and Plant Health Inspection Service
(APHIS) and described in the 1996 Farm Bill, only horses that are fit
to travel may be shipped in accordance with APHIS regulations. Upon
arrival at a U.S. slaughter plant, APHIS Veterinary Services personnel
(1) examine each shipment of horses; (2) accept and review the owner/
shipper certificate; (3) question the shipper to verify compliance; (4)
examine each horse after off-loading; (5) inspect the animal cargo area
of the conveyance; (6) document any violations; and (7) ensure the
plant provides food and water after off-loading.
At U.S. borders, port veterinarians review and compare the health
certificate and the owner/shipper certificate for each shipment. If
discrepancies are noted, port veterinarians visually examine the horses
to determine if the crossing should be permitted or refused.
The SHTP helps ensure that horses are transported humanely to
slaughter by preventing injuries and ensuring adequate food and water
so that the horses do not endure unnecessary suffering prior to
slaughter. Examination of the horses prior to and after shipment is
critical to ensuring that owners and shippers transport horses humanely
to slaughter.
USDA has abided by the prohibition of federally-funded USDA
inspections of horses presented for slaughter at official
establishments. The fiscal year 2006 Agriculture, Rural Development,
Food and Drug Administration and Related Agencies Appropriations Act
included a section prohibiting the use of appropriated funds to pay the
salaries or expenses of personnel to inspect horses (ante-mortem
inspection) after March 10, 2006. Conference report language for the
Act recognized the Food Safety and Inspection Service's (FSIS)
obligation under existing statutes to ``provide for the inspection of
meat intended for human consumption (domestic and exported).''
While the appropriations bill prohibited appropriated funds from
being used to pay for ante-mortem inspection, it does not eliminate
FSIS' responsibility under the Federal Meat Inspection Act (FMIA) to
carry out post-mortem inspection of carcasses and meat at official
establishments that slaughter horses. In response to a petition, FSIS
established a fee-for-service program under which establishments can
apply and pay for ante-mortem inspection of horses. The interim final
rule became effective March 10, 2006.
The fee-for-service program meets all of the Federal inspection
requirements for slaughter. Under the fee-for-service program, all
requirements in the regulations authorized by the FMIA that pertain to
official establishments that slaughter horses continue to apply.
Inspection program personnel are to continue to conduct all inspection
activities, including ante-mortem inspection, in accordance with the
requirements of the FMIA and applicable Federal meat inspection
regulations, including regulations pertaining to humane handling.
Question. Will the recently implemented fee-for-service regulations
regarding ante-mortem inspection of horses at slaughter diminish USDA's
ability to carry out its duty under the humane slaughter act?
Answer. No, USDA considers humane handling and slaughter high
priorities and is committed to ensuring compliance with the Humane
Methods of Slaughter Act (HMSA). USDA strictly enforces the provisions
of the HMSA, which, like other Federal meat inspection regulations,
continues to apply under the fee-for-service program.
FSIS employs a veterinarian and slaughter line inspectors at every
federally inspected slaughter establishment. FSIS compliance officers
also make further inquiries and prepare reports of instances in which
there are alleged violations of regulations, including violations of
the humane handling and slaughter regulations. All FSIS livestock
inspection personnel are trained in humane handling and understand that
they are obligated to take immediate enforcement action when a humane
slaughter violation is observed.
Question. Will the recently enacted language in the Agriculture
Appropriations Bill allow the USDA to adequately inspect the transport
of horses for humane treatment?
Answer. With the language included in the fiscal year 2006
Agriculture Appropriations Bill, USDA will be able to continue to
adequately inspect the transport of horses for humane treatment by
supporting this activity through user fees.
Question. Do you believe that the USDA is able to insure the humane
transport and slaughter at these plants in the United States?
Answer. As long as APHIS is authorized to carry out the SHTP
activities through either Federal funding or user fees, program
personnel will be able to help ensure the humane transport of horses to
slaughter. SHTP personnel help prevent injuries and ensure that the
horses have adequate food and water so that they do not endure
unnecessary suffering prior to slaughter. Examination of the horses is
critical to ensuring that owners and shippers transport horses humanely
to slaughter.
All requirements in the regulations authorized by FMIA that pertain
to official establishments that slaughter horses continue to apply.
Inspection program personnel are to continue to conduct all inspection
activities, including ante-mortem inspection, in accordance with the
requirements of the FMIA and applicable Federal meat inspection
regulations, including regulations pertaining to humane handling. FSIS
can deny or withdraw ante-mortem inspection services at horse slaughter
establishments for any applicable reason under Federal regulations.
ANIMAL IDENTIFICATION
Question. The Congress has provided over $66 million for the
implementation of an animal identification system. This level of
funding does not include an additional $18.7 million that was
transferred from the Commodity Credit Corporation. With that in mind,
the budget request for fiscal year 2007 proposes another $33 million to
continue this animal identification exercise. Please provide us with an
update on the status of animal identification and when you expect a
national program to be fully implemented.
Answer. USDA anticipates that the National Animal Identification
System (NAIS) will be a fully operational system in early 2007, and it
will consist of three main components: premises registration, animal
identification, and animal tracking. The standardized premises
registration system provided by USDA is operational in 40 States. The
remaining States are using one of several compliant premises
registration systems, for which they are financially responsible.
Premises registration continues to be USDA's priority, which the Agency
supports by providing cooperative agreement funding to States and
Tribes. The States and Tribes themselves administer the premises
registration process. APHIS has established benchmarks and timelines to
achieve full participation in this aspect of the NAIS by fiscal year
2009.
The component of NAIS that enables individual animal identification
became operational in March 2006 and is funded by USDA. Animal
identification devices will be purchased by producers. The NAIS
implementation plan calls for increased levels of animals to be
identified with the Animal Identification Number starting in 2006, and
for all newborn animals born throughout 2008 to be identified when
moved from their birth premises.
The final component of NAIS--the animal tracking databases--will be
managed and owned by the industry and States. The cost of the animal
tracking databases will be covered by the industry and States. An
interim/development phase for these tracking systems will be launched
in April 2006, and fully operational systems will be in place by
February 2007. USDA is developing the metadata system that supports the
integration of multiple animal tracking databases.
Question. How do you plan to address the infrastructure needs
(i.e.; eartags, scanners, and private databases) to implement this
program? For instance, if all the cattle in the United States are ear
tagged, without a network of scanners in place, the program will be
unable to operate.
Answer. In developing NAIS, USDA is establishing data standards and
the design of the data system. Once the identification system is
designed, stakeholders will determine which technologies are the most
appropriate to meet the needs of the system and which methods are most
cost-efficient and effective. Producers are in the best position to
determine which animal identification and data collection technologies
are used, and they will have responsibility for purchasing them.
Although the marketplace will determine which technologies are used
to support the NAIS, USDA has established minimum standards and
requirements for certain species. For example, a visual eartag with the
Animal Identification Number (AIN) imprinted on the tag has been
established as the de facto standard for cattle. Other forms of
identification that may be used with the AIN tag are referred to as
``supplemental identification.'' The use of such supplemental
identification is a decision to be made by the producer. This ensures
that the additional cost of advanced technology is optional at the
producer level. Some producers may elect not to use such technologies
within their herd management program, and USDA does not want to limit
their participation in the NAIS.
It is true that automated data collection devices will help the
industry effectively obtain information on their animals. The
integration of the NAIS data standards into management systems and
processes will result in the most successful and cost-effective
systems. The selection of such technology is best determined by the
industry sector to ensure their preferences are met in incorporating
the data standards with their management practices and information
systems. However, as long as animals are identified according to
uniform standards established through the NAIS, State and Federal
animal health officials will have a much better chance of carrying out
a successful epidemiologic investigation than they would otherwise. The
technology for identifying animals is rapidly evolving. USDA
acknowledges the need to have compatibility of systems throughout the
pre-harvest production chain, but believes producers and the
marketplace are in the best position to determine which technologies
are used.
Question. Please provide a legal opinion explaining the authority
of the Secretary to create a mandatory national animal identification
system.
Answer. The Animal Health Protection Act (AHPA), 7 USC 8301-8317,
authorizes the Secretary of Agriculture to carry out operations and
measures to detect, control, or eradicate livestock pests or disease.
It also provides ample authority to establish and implement either a
mandatory or voluntary system of animal identification. Further, the
AHPA enables the Secretary to enter into agreements with States or
other stakeholder organizations to implement either a mandatory or
voluntary animal identification program.
PREMISE IDENTIFICATION
Question. Please provide information by State on the total number
of premises, the total number of premises identified, and the
percentage of premises identified. Please keep the subcommittee updated
on these figures quarterly.
[The information follows:]
Please note: The estimated number of premises for each State was
obtained from USDA's National Agricultural Statistics Service 2002
Census of Agriculture. Based on NASS' definition of a farm, the
estimated number of premises may not accurately reflect the total
number of premises in each State for purposes of the NAIS. (Number of
premises identified as of March 2006)
----------------------------------------------------------------------------------------------------------------
Total Number of Percentage of
State estimated premises premises
premises identified Identified
----------------------------------------------------------------------------------------------------------------
Alabama......................................................... 48,036 1,766 3.68
Arkansas........................................................ 52,878 5,542 10.48
Arizona......................................................... 9,443 234 2.48
California...................................................... 52,234 2,343 4.49
Colorado........................................................ 36,747 1,667 4.54
Delaware & Maryland............................................. 13,406 2,108 15.72
Florida......................................................... 41,458 2,215 5.34
Georgia......................................................... 46,836 1,385 2.96
Iowa............................................................ 64,327 3,134 4.87
Idaho........................................................... 29,502 15,073 51.09
Illinois........................................................ 40,810 3,745 9.18
Indiana......................................................... 49,500 5,105 10.31
Kansas.......................................................... 54,030 3,057 5.66
Kentucky........................................................ 80,823 5,026 6.22
Louisiana....................................................... 27,650 517 1.87
Maine........................................................... 7,525 326 4.33
Michigan........................................................ 45,706 10,221 22.36
Minnesota....................................................... 61,625 10,606 17.21
Missouri........................................................ 109,082 7,771 7.12
Mississippi..................................................... 41,272 543 1.32
Montana......................................................... 32,370 312 0.96
North Carolina.................................................. 51,309 2,699 5.26
North Dakota.................................................... 19,716 7,182 36.43
Nebraska........................................................ 43,236 5,734 13.26
New Jersey...................................................... 9,169 70 0.76
New Mexico...................................................... 19,338 467 2.41
Nevada.......................................................... 4,764 934 19.61
New York........................................................ 40,134 13,176 32.83
Ohio............................................................ 72,543 1,417 1.95
Oklahoma........................................................ 105,158 2,904 2.76
Oregon.......................................................... 48,188 1,930 4.01
Pennsylvania.................................................... 68,699 27,987 40.74
South Carolina.................................................. 23,115 1,361 5.89
South Dakota.................................................... 32,216 3,842 11.93
Tennessee....................................................... 93,529 9,008 9.63
Texas........................................................... 277,493 9,711 3.50
Utah............................................................ 20,981 6,807 32.44
Virginia........................................................ 51,097 2,686 5.26
Vermont......................................................... 7,341 78 1.06
Washington...................................................... 34,541 947 2.74
Wisconsin....................................................... 74,511 47,171 63.31
West Virginia................................................... 26,582 7,452 28.03
Wyoming......................................................... 14,615 227 1.55
-----------------------------------------------
Total..................................................... 2,083,535 236,486I77 ..............
----------------------------------------------------------------------------------------------------------------
OFFICE OF THE UNDER SECRETARY FOR MARKETING AND REGULATORY PROGRAMS
Question. The Under Secretary position for Marketing and Regulatory
programs is currently vacant. This position is one that is very
significant based on current issues that the Department of Agriculture
continues to monitor. For instance, this office provides oversight and
management of Department actions related to avian influenza, pest
eradication programs, marketing and grading of commodities, and animal
disease surveillance.
Please provide us with an update on this Under Secretary position.
Also, how long do you expect this position to be vacant?
Answer. The Secretary appointed Dr. Charles ``Chuck'' Lambert as
the Acting Under Secretary for Marketing and Regulatory Programs on
November 14, 2005. Dr. Lambert served as Deputy Under Secretary for
Marketing and Regulatory Programs since December 2, 2002. The
Department anticipates that the President will nominate someone for
this position in the very near future.
AVIAN INFLUENZA
Question. Please give us a status of avian influenza worldwide.
Answer. Avian influenza (AI) is a disease found among poultry. AI
viruses can infect chickens, turkeys, pheasants, quail, ducks, geese,
and guinea fowl, as well as a wide variety of other birds, including
migratory waterfowl. Each year, there is a flu season for birds just as
there is for humans and, as with people, some forms of the flu are
worse than others.
AI viruses can be classified into low pathogenicity and highly
pathogenic forms, based on the severity of the illness they cause in
poultry, and within each of these forms are numerous subtypes. Most AI
strains are classified as low pathogenicity avian influenza (LPAI) and
cause few clinical signs in infected birds. Incidents of LPAI are
commonly detected in domestic poultry flocks, and LPAI does not pose a
serious threat to human health. However, two subtypes of LPAI can
potentially mutate into a more dangerous form, and USDA is initiating
programs to monitor those subtypes.
In contrast, high pathogenicity avian influenza (HPAI) causes a
severe and extremely contagious illness and death among infected birds.
The HPAI subtype that is considered to be the most serious is H5N1. Of
the few avian influenza viruses that have crossed the species barrier
to infect humans, H5N1 has caused the largest number of detected cases
of severe disease and death in humans.
The World Organization for Animal Health reports that H5N1 HPAI has
been detected in over 40 countries in 2005 and 2006. Nine countries
have reported laboratory-confirmed cases of H5N1 influenza in humans,
according to the World Health Organization.
There is no evidence that HPAI currently exists in the United
States. Historically, there have been three HPAI outbreaks in poultry
in this country--in 1924, 1983 and 2004. No significant human illness
resulted from these outbreaks.
Question. Also, please provide an update on actions taken by your
agency and how you are preparing for avian influenza.
Answer. Our safeguarding system against avian influenza (AI)
encompasses, among other things, (1) cooperation with States in
targeted and passive surveillance; (2) cooperative efforts and
information sharing with States and industry; (3) outreach to producers
regarding the need for effective on-farm biosecurity practices; (4)
trade restrictions on poultry and poultry products from overseas; and
(5) anti-smuggling programs.
Surveillance.--National surveillance for AI is accomplished through
several means: (1) the National Poultry Improvement Plan (NPIP), a
cooperative Industry-State-Federal program, which has a program for
breeder flocks that has been in place since 1998; (2) State and
university laboratories, which test suspect cases; (3) industry, which
works with States to conduct export testing at slaughter; and (4)
States, which conduct surveillance in areas where AI has historically
been a concern (e.g., the live bird marketing system).
Low Pathogen Avian Influenza (LPAI) Surveillance and Control.--
APHIS has developed a Federally-coordinated and State-assisted domestic
LPAI program that provides surveillance for H5/H7 AI in two areas: (1)
the live bird marketing system, and (2) the U.S. commercial broiler,
layer, and turkey industries. By doing so, USDA and its partners will
prevent the possible mutations and reassortments of the low-
pathogenicity virus to its highly pathogenic form; reduce the
likelihood of the virus becoming a zoonotic agent, thereby protecting
the public (human health); and preserve international trade in poultry
and poultry products.
Live Bird Market System.--In October 2004, APHIS established the
live bird market segment of the National Control Program by publishing
uniform standards to prevent and control the H5 and H7 LPAI subtypes in
live bird markets. These standards are now being implemented. APHIS
enters into cooperative agreements with States that have live bird
market activities, as well as Official State Agencies and NPIP
authorized laboratories participating in the NPIP LPAI program. States
will use funds to implement uniform guidelines for all participants in
the live bird market system in the areas of State licensing, AI
testing, recordkeeping, sanitation, biosecurity education and outreach,
surveillance, inspections, and response to positive facilities. Funds
also provide for equipment, supplies, and personnel to inspect and
collect samples within the live bird market system; perform trace backs
and trace forwards; and support additional field and laboratory
activities essential to the program. By the end of fiscal year 2005,
cooperative agreements for the live bird market system LPAI program
were initiated with 21 States (California, Delaware, Florida, Georgia,
Illinois, Indiana, Kentucky, Maine, Maryland, Massachusetts, Minnesota,
Missouri, North Carolina, New Jersey, New York, Ohio, Pennsylvania,
South Carolina, Texas, Vermont, and Virginia).
Commercial Poultry.--The NPIP is developing the commercial poultry
segment of the LPAI surveillance. The surveillance program will provide
for H5 and H7 AI monitoring of participating broiler, table egg, and
turkey production flocks and their respective breeding flocks. The
adopted program is currently proceeding through the regulatory process
that will fully establish this voluntary program as part of the NPIP.
Official State Agencies use funds to work with NPIP LPAI participants
to conduct active and passive surveillance and to develop State
containment and response plans to enhance their ability to detect and
respond to LPAI. This also facilitates trade through the documentation
of disease-free status. Funds also provide for supplies and labor for
conducting tests, laboratory cost for conducting LPAI clinical
diagnostic surveillance, laboratory equipment to conduct the official
tests of the NPIP LPAI program, site visits, sample collection,
transportation, and submission to authorized laboratories and NVSL.
APHIS has memoranda of understanding in place with 48 official State
agencies to carry out commercial flock surveillance through the NPIP.
The rule to establish the surveillance program is in the final stages
of clearance.
Domestic Surveillance of Migratory Birds.--On March 20, 2006, USDA
announced an enhanced national framework for early detection of HPAI in
wild migratory birds in the United States. This readiness plan and
system builds on, significantly expands, and unifies ongoing efforts
among Federal, State, regional and local wildlife agencies. Because
Alaska is at the crossroads of bird migration flyways, scientists
believe the strain of highly pathogenic H5N1 currently affecting
Southeast Asia would most likely arrive there first if it spreads to
North America via migratory birds. Thus, the plan recommends a
prioritized sampling system with emphasis in Alaska, elsewhere in the
Pacific flyway, and the Pacific islands, followed by the Central,
Mississippi, and Atlantic flyways.
The ability to effectively prevent the spread of highly pathogenic
H5N1 to domestic poultry operations is greatly enhanced by being able
to rapidly detect the pathogen if it is introduced into wild migratory
birds in the United States. The interagency plan outlines five specific
strategies for early detection of the virus in wild migratory birds,
including (1) investigation of disease outbreak events in wild birds;
(2) expanded monitoring of live wild birds; (3) monitoring of hunter-
killed birds; (4) use of sentinel animals, such as backyard poultry
flocks; and (5) environmental sampling of water and bird feces.
In spring 2006, under the interagency plan, the USDA and its
cooperators plan to collect between 75,000 and 100,000 samples from
live and dead wild birds in all States and 50,000 samples of water or
feces from high-risk waterfowl habitats across the United States. The
U.S. Geological Survey will initially screen 11,000 of the live bird
samples at its National Wildlife Health Center in Madison, Wisconsin.
The remaining samples will be initially tested at labs certified by
USDA in the National Animal Health Laboratory Network. Suspected
findings of HPAI will be further tested and diagnosed by the National
Veterinary Services Laboratory. Since the summer of 2005, the
Department of Interior (DOI) has been working with Alaska to
strategically sample migratory birds in the Pacific flyway. DOI has
already tested more than 1,700 samples from more than 1,100 migratory
birds. No highly pathogenic isolates have been detected. Since 1998,
USDA has tested over 12,000 migratory birds in the Alaska flyway; since
2000, almost 4,000 migratory birds in the Atlantic flyway have been
tested. All birds in these flyways have tested negative for the highly
pathogenic H5N1 virus of concern.
Education and Outreach.--The USDA's Biosecurity for the Birds
Campaign is an outreach initiative designed to educate noncommercial
poultry owners about the signs of AI and other poultry diseases;
promote the importance of practicing biosecurity; and encourage rapid
reporting of clinical signs of disease and/or unexpected deaths. The
advertising campaign began in July 2004 and has reached a circulation
of over 125 million.
Trade Restrictions and Anti-Smuggling Program.--USDA maintains
import restrictions on poultry and poultry products from countries
affected by H5N1. Furthermore, all imported live birds (and returning
U.S.-origin pet birds) must be quarantined for 30 days and tested for
the AI virus before entering the country. USDA works closely with the
Department of Homeland Security's Customs and Border Protection to
enforce import restrictions. To ensure compliance with restrictions,
APHIS concentrates on identifying smuggled poultry products and live
birds from H5N1-affected countries. APHIS also conducts routine
surveys, special operations, and marketing activities focusing on H5N1
products in commerce and at ports of entry. All suspected violations
are forwarded to APHIS' Investigative and Enforcement Services staff
for further investigation. Civil and/or criminal penalties may be
issued for violations.
APHIS has also increased its monitoring of domestic commercial
markets for illegally smuggled poultry and poultry products. USDA works
with trading partners and the World Organization for Animal Health
(OIE) to maintain safe trade.
Responding to an Outbreak.--In the event of an HPAI outbreak, APHIS
has the Foreign Animal Disease management infrastructure to conduct an
emergency response that would occur at the local level, in accordance
with the National Animal Health Emergency Management System's
guidelines for highly contagious diseases. Should the disease be
detected in commercial flocks or in back yard flocks, affected flocks
would be quickly quarantined to prevent spread. Sick and exposed birds
would be euthanized and the premises cleaned and disinfected to stamp
out the disease. USDA would conduct epidemiology investigations to
determine the source of the virus, and to track the movement of birds
to contain spread.
To ensure immediate deployment of supplies necessary to contain,
control, and eradicate an HPAI outbreak, APHIS is building a stockpile
of needed vaccines, antiviral, and therapeutic products including
reagents, disinfectants, and equipment. We are also conducting
simulated exercises specific to avian influenza to ensure an effective
response to an outbreak of the disease. Further, APHIS is developing
models of the potential impacts of avian influenza outbreak in the
United States and alternative control strategies.
If the scope of the HPAI outbreak is beyond APHIS' and the affected
State's immediate resource capabilities, additional resources can be
obtained through the following mechanisms: the National Response Plan's
Emergency Support Function #11 ensuring that animal-health emergencies
are supported in coordination with the emergency support function that
covers public health and medical services; and the National Animal
Health Emergency Response Corps and various State response corps can be
activated. These private veterinarians and animal health technicians
are ready to assist on short notice.
HURRICANE ASSISTANCE
Question. The Congress recently provided emergency funding through
the hurricane supplemental for a number of programs that are within the
rural development mission area. To be more specific, we provided
supplemental funding for the Rural Community Advancement Program and
Rural Housing.
Please provide us with an update on the Department's use of the
funds. What additional needs are you aware of in rural areas that were
affected by Hurricane Katrina?
Answer. On March 13, 2006, Rural Development published a Notice of
Funding Availability (NOFA) in the Federal Register implementing the
hurricane supplemental provisions of Public Law 109-148.
The supplemental provided $35 million in budget authority for our
direct and guaranteed homeownership programs, $10 million for direct
homeownership repair loans, and $20 million in direct homeownership
repair grants. These funds have been allocated to the gulf region. We
expect that all direct loan and grant funds will be obligated in fiscal
year 2006. Of the $15 million of budget authority for guaranteed
homeownership loans ($1.3 billion in deliverable program level), we
expect the majority of these funds will be carried over into fiscal
year 2007. We are also planning to use a portion of this budget
authority to implement a mortgage recovery program for our guaranteed
homeownership customers. Under this program, Rural Development will
advance to a lender up to 1 year's worth of payments to bring the
customer to a current status. To be eligible for the program, the
customer had to be in good standing with the lender prior to the
hurricanes and have a reasonable prospect for success. The debt would
be secured by a non-interest bearing soft-second lien on the property
payable upon sale or transfer of title. Rural Development will be
publishing a NOFA on this initiative in the near future.
The Water and Environmental Programs received $45 million in budget
authority. We continue to monitor the situation with regard to
telecommunications and electric demands, but to date, we have not
received any applications. The first request for 2005 hurricane funds
was received on April 10, 2006, and is in the process of being reviewed
for funding qualifications.
Additional demand for our programs is still difficult to estimate.
Rebuilding of the housing stock in the gulf region is very dependent on
ensuring that adequate infrastructure exists, on-going negotiations
between existing homeowners seeking Federal Emergency Management Agency
(FEMA) and insurance benefits, lack of builders, and high building
costs. Our local field offices continue to work with our customers and
within these rural communities to help with recovery efforts.
515 HOUSING PROGRAM
Question. The fiscal year 2007 budget request eliminates funding
for the 515 Rural Rental Housing Program. The 515 housing program
provides funding for construction and revitalization of affordable
rental housing for rural families who have very low to moderate
incomes.
If the Congress does not provide funding for the 515 housing
program, will low income citizens have any other option when it comes
to affordable housing?
Answer. Yes. Rural Development's section 538 Guaranteed Rural
Rental Housing Program (GRRHP) provides affordable housing to very-low
and low income families. The section 538 program works in partnership
with other financing entities to create affordable housing. The lender
provides the financing to construct or renovate affordable housing,
Rural Development guarantees the loan. Guaranteed loans generate 10
times more loan funds for the same budget authority than do direct
loans, and attract 2.5 times more private sector leveraged money. More
than 90 percent of the closed loans in the portfolio have 9 percent tax
credit dollars. Tax credits require owners to achieve affordability
targets, resulting in high percentages of low and very low income
tenants. Many tenants in section 538 properties have section 8 vouchers
which assist the tenants in paying rent. The program also offers
interest credit subsidies that assist in lowering the interest rate
throughout the term of the loan. The subsidized interest rate keeps
rents low for tenants. The section 538 program requires that rents not
be more than 30 percent of 115 percent of the area median income, and
average rents for all units at the property cannot be more than 30
percent of 100 percent of area median income.
For example, last year the following was provided for new
construction:
[The information follows:]
COMPARING RENTAL UNITS PRODUCED IN FISCAL YEAR 2005 WITH SECTION 515 AND
538 BUDGET AUTHORITY
------------------------------------------------------------------------
Guaranteed
Direct loans loans
------------------------------------------------------------------------
Budget Authority........................ $13,200,000 $3,462,000
Funding Authority....................... $28,013,000 $99,200,000
Units Produced.......................... 783 3,313
Tenants < 60 percent of Area Median 720 1,000
Income (Est.)..........................
------------------------------------------------------------------------
While the average incomes may appear different ($10,036/year
adjusted income in Section 515 vs. $18,400/year gross income in Section
538), the aggregate number of families served in the very low income
category is greater in Section 538.
RURAL HOUSING VOUCHER PROGRAM
Question. In fiscal year 2006, Congress included $16 million for a
new rural housing voucher program. This funding is available to assist
tenants who are unable to reside in the current rental arrangement due
to a property owner exiting the program. The fiscal year 2007 budget
request increases the funding level for housing vouchers to $74
million.
Please take a moment to explain the current status of the $16
million that was provided for fiscal year 2006. Also, do you expect the
funding that has been provided for the current fiscal year to meet the
demand?
At this point, it seems difficult to determine how many owners will
choose to prepay and exit the program. Please explain how the
Department determined this level of funding for fiscal year 2007.
Answer. On March 20, 2006, Rural Development published a NOFA
announcing the availability of a voucher demonstration program and has
started to utilize the $16 million that was provided for fiscal year
2006. The first Rural Development Vouchers were issued in early April.
We anticipate that demonstration funding will be sufficient to provide
2,700 vouchers to protect tenants in projects that prepay during fiscal
year 2006.
The Comprehensive Property Assessment (CPA) found that 10 percent
of the properties (approximately 1,700) could be economically viable to
prepay, if permitted. This is estimated to be about 46,000 units, with
approximately one-third of the prepayments occurring in each of the
first 3 years. The $74 million proposed fiscal year 2007 funding level
allows USDA to fund approximately 15,000 units at a per voucher funding
level of slightly over $400 per month. This will include the renewal of
up to 2,700 vouchers funded during fiscal year 2006. However, the
specific dollar amount and number of tenants is dependent on the number
of properties that pre-pay, their location, and the market conditions
at the time.
WATER AND WASTEWATER
Question. The budget request proposes to change the calculation of
the interest rate for water and wastewater grants from the fixed rate
of 4.5 percent to a floating rate set at 60 percent of the market rate.
Please take a moment to explain the reason why this proposal has
been included and how it will affect the current program.
Answer. The reason the President's budget proposed a change in the
method it uses to determine its loan interest rates is to enable
communities to better use available loan funds and make the lowest rate
more reflective of changing market rates. Under our current method of
establishing a three-tier interest rate, the market rate is indexed
quarterly to the Bond Buyer 11 GO Bond Index. The poverty rate is fixed
at 4.5 percent and the intermediate rate is halfway between the market
and poverty rates.
In the last 12 quarters the market rate has been at or below 4.5
percent 7 times, effectively reducing our three-tier to a one-tier
interest rate schedule. To avoid this, we are proposing to index all
three interest rate tiers to the 11 GO Bond Index. The market rate will
remain at the 11 GO Bond Index, the intermediate rate will be 80
percent of the 11 GO Bond Index and the poverty rate will be 60 percent
of the 11 GO Bond Index. The final rate will be 3.2 percent for fiscal
year 2007.
Question. Most importantly, would this be an administrative change
or will it require legislative language?
Answer. The change in rate calculation is administrative.
ORGANIC RESEARCH
Question. Please provide information on all current research on
organic agriculture performed by ERS and ARS or funded through CSREES.
Answer. A search of the Current Research Information System
indicates that there are 187 active organic agriculture research
projects supported by CSREES. These projects are being conducted in 42
States with 57 different cooperating land-grant university or other
institutional partners. In total, these projects support an equivalent
of 46 scientist years, and the funds are fairly evenly distributed
across the four CSREES regions. The $10.2 million invested in these 187
projects is further leveraged by the State partners to increase funding
support to $20.5 million for organic research.
An assessment of all Agricultural Research Service research
activities supporting organic agriculture has been completed. Of $18.4
million spent by ARS that directly benefits organic agriculture, $4.7
million is spent for research conducted in the field under conditions
that are the same or similar to certified organic. Other ARS research
that indirectly benefits organic agriculture totals $44.1 million. ARS
now has a national program leader for Integrated Agricultural Systems
who oversees ARS organic agriculture research. Based on the customer
input from the 2005 ARS organic agriculture workshop, ARS scientists
are encouraged to incorporate organic agriculture objectives into
research plans as part of the next national program cycle. New organic
field research sites are being planned at Ames, Iowa, Mandan, North
Dakota, and Fort Pierce, Florida, in addition to field research already
conducted at Salinas, California, Lane, Oklahoma, Beltsville, Maryland,
Dawson, Georgia, Morris, Minnesota, Weslaco, Texas, and Orono, Maine.
ARS is developing a national strategy to identify the greatest barriers
to organic agriculture production in different regions of the country.
ARS will use organic agriculture customer input to develop specific
research problems for the 2007 Integrated Agricultural Systems National
Program Action Plan.
The Economic Research Service has been tracking organic acreage and
livestock, by commodity since 1997, and partnered with NASS in
increasing the availability of production data and statistics. More
recently, ERS has gotten involved in organic marketing and social
science research, including work comparing United States to European
organic policy, issues and trends in retailers and handlers and
consumer data analysis. The most recent addition to their research
projects is data tracking wholesale organic produce prices. In terms of
leading the research agenda, ERS has sponsored two workshops in the
past 5 years to frame the consumer, production and environmental issues
that warrant more research.
The National Agricultural Library, through its Alternative Farming
Systems Information Center, general reference and referral services,
document delivery services and collection development provides access
to and/or can obtain access to published research on organics conducted
outside the United States. Some of the information is made available
through the AFSIC Web site, the NAL Agricola database and through other
databases to which NAL has access. NAL helps organic farmers to locate
information on organic research that is conducted nationally and
internationally.
Question. Please provide information on all statistics on organic
agriculture published through NASS.
Answer. Only one directed question on organic sales was included in
the 2002 Ag Census, and NASS reported statistics for the value of
certified organically produced sales by total sales and number of
farms. The 2007 Census of Agriculture was modified to address the
increasing data needs of the organic sector and will ask a number of
new questions of producers in Section 22. Respondents will be asked
whether the operation is a certified organic operation, how many acres
were used for organic production, the total value of sales for crops
and livestock produced and sold, and how many acres were being
converted to organic production in the past year.
NASS also conducts the Agricultural Resource Management Survey
(ARMS) that asks very specific questions about production practices,
including organic, which together with other detailed data could
provide rich analyses of the financial performance, sociodemographic
and marketing choices and trends of organic producers. This cooperative
arrangement with the Economic Research Service is likely to increase
the level of data and research available. For example, the ARMS for
dairy, added an oversample of 700 organic dairy farmers to this survey.
An expanded section on pasture, organic certification, and other
questions to capture aspects of organic production that can be
contrasted with conventional dairy production systems were also added.
A similar project is underway to explore the costs and production
practices of organic soybean producers through the ARMS survey program.
Question. How would the amount of research and statistical
information available for organic agriculture compare to that for other
sectors of agriculture?
Answer. According to the World Trade Organization's International
Trade Centre, certified organic products make up between 2 and 2.5
percent of total retail food sales in the United States. ARS research
in direct support of organic agriculture is $18.4 million, or 1.4
percent of its total budget in fiscal year 2005. CSREES research in
direct support of organic agriculture is $10.2 million or 0.8 percent
of its total budget in fiscal year 2005.
The data on organic production has been relatively scarce, a
situation that is being remedied with the ERS/NASS ARMS, and will also
improve with the addition of questions to the 2007 Ag Census. With the
increasing inclusion of questions on organic sales, acres and
production practices relevant to organic producers, comparable data
will be available on organic producers.
On the marketing side, data and statistics on organic agriculture
are less available than for conventional products. Again, ERS has taken
lead in increasing the amount of information available for some
products and geographic markets, but until the Agricultural Marketing
Service (AMS) adapts their price reporting to include more delineations
for organic product lines, and explores how prices are discovered
differently, for example through direct markets, little useful price
information will be available to organic producers and marketing
channel partners. AMS is currently making changes that will result in
greater availability of marketing information on organic products.
Question. What are the organic agriculture's greatest areas of need
for research and statistical information?
Answer. The research topics identified at the ARS Organic
Agriculture Customer Workshop in January 2005 suggest where more
research is needed in core areas of production, processing, resource
management and economics. These topics include how organic production
contributes to different aspects of food quality, safety and security,
developing production systems to increase profitability, ways to manage
and measure the health of soils, the environmental benefits from
organic production systems, ways to achieve the greatest productivity
in organic production, the contributions of organic production to
overall sustainability, genetic materials specific to organic
production systems, and biologically-based strategies to manage
diseases, weeds and insect pests.
A recent white paper on organic agriculture developed by CSREES
identified a number of research priorities that will facilitate organic
production. The research priorities include developing an improved
understanding and management of soil fertility, pest management,
livestock production and health; the development and evaluation of
adapted cultivars and breeds, assessment of the long term impacts of
whole-farm systems; the evaluation of the economic, business and social
aspects of various organic production systems to improve grower
returns, reduce market barriers, marketing strategies to increase
consumer demand; the development of science-based information on which
to base organic regulations, thereby assuring rational regulation,
providing options to overcome current constraints, and assisting in
overcoming the increasing number of complex, technical barriers to
foreign trade; assessment of the production and processing practices
for impact on consumer valuation of various attributes such as
identifying: varieties with enhanced flavor and nutrition, improved
practices to add value and enhance shelf life and quality, effects of
production systems on product nutrition and quality, and mechanisms to
minimize GMO contamination of organic products; and the identification
of the marketing and policy constraints on the expansion of organic
agriculture, especially among conventional growers who would otherwise
transition to organic.
The high interest in, and widespread use of, data collected by the
ERS on organic production scale and growth would suggest that any new
data that can be collected on certified acres, including the detailed
information collected in the Agricultural Resource Management Survey,
would be a good investment. But, after consultation with the Economic
Research Organic Work team, the true need is information on prices,
marketing margins, marketing practices, trade data and other
information that would allow for better research on competitiveness,
profitability, emerging marketing trends and how the organic food
market performs under its evolving growth and change in structure.
AVIAN FLU
Question. Please provide information on all current USDA research
on highly pathogenic avian influenza. Please provide a brief
description of the research topic, where it is being performed, and the
funding history by fiscal year.
Answer. Avian influenza (AI) presents a major disease threat to the
U.S. poultry industry. The recent highly publicized outbreak of H5N1
avian influenza (AI) in chickens and people in Hong Kong illustrates
the potential public health concerns that may surface as a result of AI
infections. In 1997, a deadly form of AI (H5N1) infected poultry farms
and live poultry markets in Hong Kong and was associated with 18
hospitalized human cases, of which six died. More recently, a similar
virus has been seen spreading in poultry throughout Asia and Europe and
is occasionally infecting humans (approximately 200 cases and 100
deaths). Less pathogenic strains of avian influenza have caused
problems in many U.S. turkey flocks and live poultry markets since the
1960's, although few commercial chicken flocks were involved. Because
of research on AI viruses in recent years we now know that some viruses
can rapidly change from causing only mild disease to ones that cause a
deadly disease in chickens. It is likely that the longer a virus
infects commercial poultry, the more likely it is to cause the severe
form of the disease. This research seeks to understand the changes that
are required for this shift in ability to cause disease. The research
also seeks to control the presence of AI viruses in poultry by
development of new and more effective vaccines and to develop tests to
more rapidly diagnose infection in chickens.
It is crucial that we both seek ways to eradicate or control these
AI viruses and to understand their potential for a virulence shift. The
research takes several approaches to these goals including: identifying
and evaluating the best vaccination approaches to control the disease;
identifying the source(s) and family relationships of the viruses;
characterizing the events leading to increase in virulence;
characterizing the chicken's response to infection with AI viruses; and
characterizing the factors that allow AI viruses to cross infect other
species of animals. To aid in the detection and control of the virus,
ARS developed and APHIS validated a rapid detection assay for Avian
Influenza Virus (AIV), which is now widely deployed into the National
Animal Health Laboratory Network.
For the control of low pathogenic AI outbreaks, vaccination is
being more commonly considered, because it can potentially help control
an outbreak at a lower cost than depopulation programs. At ARS, the use
of currently available and new vaccination strategies are being
investigated for the control of AI. Currently only two types of
vaccines are available for use for AI, killed adjuvanted vaccines and
fowlpox-vectored vaccines. Our research has shown that to get optimal
protection from these vaccines, it is important to match the vaccine to
the challenge strain. A better match of vaccines allows less virus to
be shed from vaccinated but infected birds. Additional research has
shown that when vaccination is used on a widespread basis antigenic
drift, similar to what is seen with human influenza viruses, can be a
problem for decreased effectiveness for the vaccine. Additional
research has been focused on using viral-vectored or recombinant
vaccines for AI including fowlpox vectored vaccines, replication
incompetent alphavirus vectors, and Newcastle disease virus vectored
vaccines. All three of these vaccines types have shown to provide
protection from influenza challenge, and can provide the advantage of
use as a DIVA (differentiate infected from vaccinated animals) vaccine.
These vaccines are still being evaluated to determine if they have
significant advantages over commercially available vaccines and can be
produced in a cost-effective manner. Additional vaccine technologies,
including the reverse genetics approach to create AI viruses that can
also be used with the DIVA approach have also been shown to be
effective.
To aid in the understanding of AI epidemiology, AI viruses received
recently from U.S.A. (low pathogenic), Hong Kong, Italy, El Salvador,
Chile, Netherlands, Indonesia, Viet Nam, and South Korea are being
classified for disease causing potential. Research studies include
molecular characterization related to the lethality of the viruses, the
search for genetic markers for this lethality, and investigating the
epidemiology and spread of the viruses. Pathogenic potential of the
viruses is being assessed in disease free chickens held in
biocontainment facilities. ARS is developing and evaluating techniques
to predict which mild forms of viruses will change to more deadly forms
of the AI virus. Furthermore, ARS is assisting the Centers for Disease
Control and Prevention with evaluating recombinant vaccines to assure
human vaccines will not cause disease in poultry.
With the supplemental funding received in fiscal year 2006, ARS
plans to conduct the following:
--research on developing and validating existing and new vaccines to
ensure that they can be distributed to domestic poultry or wild
waterfowl before, during, or after an outbreak to help them
build immunity and resistance to AI infection. In addition, ARS
will provide direct support to the appropriate in-country
counterparts in Asia for testing and evaluating different
vaccine formulations via challenge studies; in addition to
virus sequencing, cross hemagglutination inhibition titers, and
neutralization titers.
--ARS with partners will develop rapid, State laboratory based or
site-deployable tools and other assays that will allow rapid
detection and classification of AI viruses. The tests will be
accurate for detecting AI virus in various samples including
birds (domestic and wild) and environmental specimens. The
other assays will include: (1) development, bench validation
and limited field validation of a real-time RT-PCR (RRT-PCR)
for screening of wild birds for AI viruses; (2) microarray test
development for AI virus classification; (3) more sensitive
penside tests for avian influenza.
--genome sequencing of poultry outbreak and wild bird AI viruses in
SEPRL archive and those obtained by on going surveillance, and
characterize them biologically. ARS will sequence genomes and
then mine the sequence data for viral evolution, relationships,
and determinants of virulence as well as identify diagnostic
sequences and potential vaccine antigens. Viruses will be
studied to determine genomic changes that define host
adaptation and specificity and changes necessary for AI viruses
to cross to new avian and mammalian hosts.
--ARS with partners will conduct epidemiological studies to identify
the risk factors for transmission of virus between farms and
biosecurity mitigation steps to reduce transmission. In
addition, targeted surveillance of wild birds and poultry at
high risk for avian influenza will be conducted to assess risk
of introduction to farms.
ARS supports APHIS and poultry industry action programs with
epidemiology, molecular virology, pathogenesis research, and technical
assistance on AI. ARS is directly assisting APHIS in trade negotiations
of poultry products by determining the risk for low and high
pathogenicity AI in poultry meat and the ability of pasteurization to
inactivate AI in egg products.
The funding for Avian Influenza Disease research for fiscal years
2005, 2006 and 2007 are provided below for the record.
----------------------------------------------------------------------------------------------------------------
Fiscal year Fiscal year Fiscal year
2005 2006 2007
----------------------------------------------------------------------------------------------------------------
Athens, GA...................................................... $2,171,200 \1\ $2,344,400 $5,418,400
----------------------------------------------------------------------------------------------------------------
\1\ Does not include the fiscal year 2006 supplemental funding of $7 million.
RENEWABLE ENERGY RESEARCH
Question. Please provide information on all current USDA research
on renewable energy. Please provide a brief description on the research
topic, where it is being performed, and the funding history by fiscal
year.
Answer. Both the Agricultural Research Service (ARS) and the
Cooperative State Research, Education, and Extension Service (CSREES)
support renewable energy research. ARS, as the Department of
Agriculture's in-house research agency, has a nationwide network of
facilities and research scientists who conduct basic and applied
research for the purpose of solving problems associated with regional
and national high priority issues, including renewable fuels, affecting
producers and consumers of U.S. agricultural products ARS cooperates
closely with the Cooperative State Research, Education, and Extension
Service (CSREES) and the university system.
ARS conducts a national Bioenergy and Energy Alternatives Research
Program (http://www.ars.usda.gov/research/programs/
programs.htm?NP_CODE=307), with the vision of meeting America's energy
needs with renewable resources. The mission of this research addresses
national goals of improving energy security, environmental quality, and
the economy, with an emphasis on the rural economy. Major program goals
include:
--Sustainable energy from agriculture that is energy efficient and
economic.
--Understanding the recalcitrance of biomass.
--Exploiting the potential of molecular biology to improve quantity
and quality of agricultural biomass feedstocks and to improve
the effectiveness of conversion organisms.
--Matching the characteristics of biomass feedstocks with the
requirements of conversion organisms.
--Devising value-added biofuel coproducts.
--Meeting on-farm and rural community energy needs for liquid fuel,
electricity, and heat.
--Reduce energy cost for agricultural operations.
To achieve these goals, research is conducted from feedstock,
including crops, crop residues, byproducts, and wastes, to fuel,
including ethanol, biodiesel, biogas, and hydrogen. Examples include:
--Genetic modification of plants to improve the quality
characteristics and increase the quantity of feedstock
produced.
--Technology to sustainably produce and harvest the biomass, to
efficiently handle, add value, store, and deliver the
feedstock, and to quickly measure its quality at any point in
the process.
--Technology for biological or thermochemical conversion of feedstock
to fuel and coproducts. This includes processes, organisms, and
product separation for energy efficient and economical
application for use on-farm, in local community size plants,
and in large biorefineries.
--Technology to improve quality, performance, and ease of using the
biofuels produced.
Successful completion of the proposed work will promote the
enhanced use of agricultural commodities by providing additional
markets for farmers and for fuel producers. The public will benefit
from reduced environmental pollution and enhanced energy security
associated with using a domestic resource that reduces dependence on
imported petroleum and improves the balance of trade. Outcomes and
impact include:
--Successful and sustainable systems of bioenergy production
--Energy crops with greater yield and more desirable properties
--Energy efficient conversion of herbaceous crops and crop residue to
ethanol
--Biodiesel with reduced emissions and better performance
--Less costly biofuels
--Distributed rural energy production for farm, rural community, and
national needs
--Enhanced rural economy
With its nationwide capabilities in natural resources and
sustainable agricultural systems, in quality and utilization of
agricultural products, in crop production and management, and in animal
production and management, ARS has the research capacity and is well
positioned to lead and to partner with other Federal agencies, States
and private interests to develop energy efficient, economical,
sustainable, and socially acceptable technologies to make agriculture
energy independent and for agriculture to be a major supplier of energy
for the Nation.
Components of ARS Bioenergy and Energy Alternatives Research are
conducted at the following locations:
--Energy Crop research:
--Western Regional Research Center, Albany, California:
--Genetic manipulation to develop crops more easily converted to
ethanol.
--Lincoln, Nebraska:
--Grasses with improved biomass yield and quality and sustainable
grass production management practices.
--St. Paul, Minnesota:
--Legumes with improved biomass yield and quality and sustainable
legume production management practices.
--Corvallis, Oregon; El Reno, Oklahoma; Mandan, North Dakota; Tifton,
Georgia; and University Park, Pennsylvania:
--Germplasm, physiology, and management technology for herbaceous
energy crop production on agricultural lands managed for
conservation.
--Madison, Wisconsin:
--Harvesting, handling, storage, and characterizing quality of
energy crops and plant residues.
--Ethanol research:
--Eastern Regional Research Center, Wyndmoor, Pennsylvania:
--Process technologies and systems that reduce cost of ethanol
production.
--Environmentally sustainable processes to maximize ethanol yield
from starch.
--Processes for generating high value products from parts of corn
not converted to ethanol.
--Processes to integrate production of ethanol from stover and from
grain.
--National Center for Agricultural Utilization Research, Peoria,
Illinois:
--Development of superior microbes and enzymes for conversion of
agricultural commodities to ethanol.
--Processes for conversion of cellulosic agricultural materials to
ethanol.
--Technologies to recover valuable coproducts during ethanol
production.
--Western Regional Research Center, Albany, California:
--Integration of plant molecular biology, genomics, bioinformatics,
and plant transformation to produce ethanol from cereal
crops.
--Enzymes, which work at lower temperatures, to improve energy
efficiency.
--Biomaterial membranes that improve separation of water and
ethanol.
--Richard B. Russell Research Center, Athens, Georgia:
--Characterization of herbaceous plant parts suitable for
conversion to ethanol.
--Methods to evaluate plant material composition.
--Enzymatic processes to extract carbohydrates from corn stover.
--Brookings, South Dakota:
--Processes and products to enhance value of distillers dried
grains.
--Converting cellulosic ethanol by-products into value-added
coproducts.
--Processes that add value to cellulosic feedstocks on the farm.
--Biodiesel research:
--Eastern Regional Research Center, Wyndmoor, Pennsylvania:
--Enzymatic processes to convert animal fats, vegetable oils and
restaurant greases into biodiesel.
--Burning of fats and oils as heating fuel.
--National Center for Agricultural Utilization Research, Peoria,
Illinois:
--Quality and performance, including storage stability, cold flow,
and emissions reduction, of diesel fuels and additives
produced from vegetable oils.
--Use of biodiesel as aviation fuel.
--Bushland, Texas:
--Performance and emissions of biodiesel as affected by feedstock.
--On-farm biofuel production.
--Other renewable energy research:
--Beltsville, Maryland:
--Production of electricity from animal manure via anaerobic
digestion and use of the methane produced to generate
electricity.
--Wyndmoor, Pennsylvania:
--Thermo-chemical conversion of plant biomass to hydrogen.
--Peoria, Illinois:
--Biological production of hydrogen.
--Bushland, Texas:
--Systems to provide renewable energy for on-farm and remote
agricultural needs.
CSREES RENEWABLE ENERGY RESEARCH
CSREES with Hatch Act, McIntire-Stennis, Evans-Allen, National
Research Initiative, Special Research Grants, and Federal
Administration funding supports research projects focused on renewable
energy. CSREES is the lead agency for the USDA Small Business
Innovation Research Program. Funding for this program comes from CSREES
and other USDA agencies and also supports projects on renewable energy.
The majority of projects address technical obstacles to the cost-
effective conversion biomass to energy. The majority of conversion
technologies are biological or thermo/chemical conversion of vegetable
oils, starches and lignocellulosic materials into biofuels. The
information that is requested is listed below according to the funding
authority.
I. Competitive awards through the National Research Initiative
(1) NOVEL BIOMASS PROCESSING CHEMISTRY
START: 01 September 2003.
COMPLETION DATE: 31 August 2006.
TOTAL BUDGET: $175,000.
PROJECT LOCATION: Institute of Paper Science And Technology,
Atlanta, Georgia.
OBJECTIVES: The objective of this program is directed at using
ionic liquid-based systems to develop novel oxidative/reductive
chemistry that will fragment and convert lignin into high-value, low
molecular weight chemicals that could be employed as a feedstock for
the plastic and chemical industries. This research program will take
advantage of recent advances in ionic liquids to develop new chemical
reactions that will convert waste biomass lignin into high-value
chemical components including phenol derivatives for adhesive/polymer
industry, polycarboxylate derivatives that will be employed by the
detergent and metal chelant industry and/or lignin fragments for
polymer synthesis.
(2) PROCESS FOR XANTHOPHYLLS FROM CORN
START: November 2003.
COMPLETION DATE: 14 November 2006.
TOTAL BUDGET: $142,000.
PROJECT LOCATION: University of Illinois, Urbana, Illinois.
OBJECTIVES: The overall objective is to develop a process for the
production of xanthophylls from corn using a combination of solvent
extraction, membrane technology and chromatography. There are two
specific objectives in this proposed research: (1) Screen membranes for
their separation characteristics and stability in organic solvents, and
optimize performance parameters of selected membranes for the
concentration of xanthophylls extracted from corn. (2) Develop a method
for producing high-purity xanthophylls by chromatography. This project
benefits human health by creating a low-cost source of lutein and
zeaxanthin. It also benefits the dry-grind ethanol industry by creating
a high-value coproduct that can offset the need for tax waivers and
subsidies. Xanthophylls can generate an income of $1-2 per bushel of
corn which is 25-33 percent increase in net revenue with no additional
materials coming in to the plant.
(3) GENETIC ENGINEERING OF YEAST FOR CO-FERMENTING ALL FIVE CELLULOSIC
SUGARS TO ETHANOL
START: 01 September 2003.
COMPLETION DATE: 31 August 2005.
TOTAL BUDGET: $227,003.
PROJECT LOCATION: Purdue University, West Lafayette, Indiana.
OBJECTIVES: Researchers have developed recombinant Saccharomyces
yeast that can effectively ferment xylose, a major sugar molecule in
cellulosic biomass, to ethanol. The objective of this project is to
make the yeast also able to effectively ferment other sugars in
cellulosic biomass so that the engineered yeast can be more effective
in using this ideal feedstock to produce fuel ethanol.
(4) SORGHUM AS A VIABLE RENEWABLE RESOURCE FOR BIOFUELS AND BIOBASED
PRODUCTS--SHORT TITLE: SORGHUM BIOCONVERSION RESEARCH (SBR)
START: 01 September 2004.
COMPLETION DATE: 31 August 2007.
TOTAL BUDGET: $450,000.
PROJECT LOCATION: Kansas State University, Manhattan, Kansas.
OBJECTIVES: Identify hybrids, and elite germplasm, with genetic
variation for a range of selected compositional characteristics
(starch, starch type, hardness, protein, grain phenotype, etc). Develop
a coordinated understanding of the relationship among composition,
chemical structure, physical features, and the availability of
fermentable/usable-stored glucose (starch). Expand a demonstrated
micro-fermentation system to allow higher-throughout screening of test
samples, and test conditions, for the production of ethanol and lactic
acid. Integrate the results from the above experiments to determine the
impact of compositional, structural, and physical factors on the
efficiency of bioprocessing, and to identify the key interactions
impacting fermentation yield from sorghum grain. Create an Energy Life
Cycle Analysis Model to quantify and prioritize the savings potential
from factors identified in the above research, based on both energy and
economics.
(5) PROTEOMIC ANALYSIS OF ETHANOL SENSITIVITY AND TOLERANCE IN
THERMOPHILIC AND ANAEROBIC BACTERIA
START: 01 September 2004.
COMPLETION DATE: 31 August 2006.
TOTAL BUDGET: $330,000.
PROJECT LOCATION: University Of Kentucky, Lexington, Kentucky.
OBJECTIVES: The specific objectives are to: Characterize
alterations in the proteomic profile of C. thermocellum and T.
ethanolicus in response to ethanol challenge. Determine the proteomic
profile of ethanol resistant strains. Examine if proteomic changes
elicited by ethanol are similar to those caused by environmental
stresses including temperature, pH, and organic solvents. Evaluate
alternative approaches to identify and quantify changes in proteomes of
thermophilic bacteria.
(6) AN INTEGRATED APPROACH TO REDUCED RISK OF PHOSPHORUS POLLUTION OF
SURFACE WATERS IN CROP-LIVESTOCK BASED MANAGED ECOSYSTEMS OF THE
MIDWEST
START: 15 August 2005.
COMPLETION DATE: 14 August 2009.
TOTAL BUDGET: $490,000.
PROJECT LOCATION: Nebraska Corn Development, Utilization and
Marketing Board Lincoln, Nebraska
OBJECTIVES: Develop methods for removing phosphorus (P) from corn
milling by-products, or improving P availability through while
minimizing the loss of feed value for ruminants and for enzymatic
degradation of phytate to P to produce value added products such as
inositol, inositol phosphates and struvites. Develop a decision tool on
the cost effectiveness of composting livestock manure to improve the
economics of transporting manure greater distances to more land for
agronomically and environmental sound application rates. Determine the
effects of manure applied several years previously, of deep
incorporation of surface soil with excessively high soil P, and the
effects of setback alternatives on the potential for P delivery to
surface waters. Validate and calibrate a watershed characterization
model and two P-indexes for assessment of the potential for P delivery
to surface waters. Provide education to various stake-holders on P
related issues.
(7) LIGNIN BLOCKERS FOR LOWER COST ENZYMATIC HYDROLYSIS OF PRETREATED
CELLULOSE
START: 01 September 2004.
COMPLETION DATE: 31 August 2007.
TOTAL BUDGET: $401,000.
PROJECT LOCATION: Thayer School of Engineering, Hanover, New
Hampshire.
OBJECTIVES: The primary goal is to more fully develop lignin
blocker technology for biological conversion of pretreated cellulosic
biomass to glucose that can be converted to ethanol and a range of
other products either biologically or chemically. In particular, to
understand and apply lignin blockers to reduce enzyme loadings and
costs for enzymatic digestion of pretreated cellulose to glucose. The
first objective of the research is to screen different soluble proteins
and other promising compounds not yet considered with pretreated
biomass to define a library of promising lignin blockers that could
reduce cellulase loadings and costs. The second objective is to measure
cellulase and blocker adsorption and desorption when applied with
different lignin blockers and cellulase addition strategies and
pretreatment conditions. The third objective is to define the impact of
the most promising lignin blockers on enzymatic hydrolysis of
pretreated cellulose to determine how performance of the system is
influenced by amounts of lignin blocker, cellulase, cellulose, and
lignin; temperature; pH; glucose accumulation; beta-glucosidase
supplementation; and ingredient addition strategies. The fourth
objective is to investigate the performance of the most promising
lignin blockers when used with pretreated cellulose in simultaneous
saccharification and fermentation (SSF) to define the impact on
performance versus cellulase use because SSF eliminates equipment and
speeds rates, yields, and concentrations of ethanol production while
inhibiting invasion by unwanted organisms. The final objective is to
develop models to relate enzymatic hydrolysis rates and yields to
concentrations of lignin blockers and cellulase; the cellulose, lignin,
and other component content of pretreated biomass; process conditions;
and the use of other ingredients (e.g., supplemental beta-glucosidase).
This research element will focus on improving the understanding of how
adsorption and desorption of lignin blockers and cellulase are
influenced by processing conditions and how they in turn affect the
performance of hydrolysis systems and use that information to project
pathways to further improve performance
(8) NOVEL MEMBRANE TECHNOLOGY FOR VOLATILE BIOPRODUCT RECOVERY FROM
FERMENTATION BROTHS
START: 01 September 2003.
COMPLETION DATE: 31 August 2006.
TOTAL BUDGET: $168,700.
PROJECT LOCATION: New Jersey Institute of Technology, Newark, New
Jersey.
OBJECTIVES: Develop a novel composite membrane system from surface
modified porous hydrophobic polypropylene (PP) hollow fibers and an
appropriate liquid membrane in the macropores of the PP hollow fibers
and determine their separation performances from model solutions of
individual bioproducts, such as butanol, ethanol, acetic acid,
propionic acid and butyric acid under the influence of permeate side
vacuum. Study a batch fermentation system externally coupled with the
novel membrane device and total broth recycle for the production and
recovery of acetone, butanol and ethanol (ABE) from Clostridium
acetobutylicum. Study batch fermentation also with total broth recycle
for the production and recovery of propionic acid.
(9) BEYOND THE BARRIER: ETHANOL FROM LIGNOCELLULOSIC BIOMASS USING
METABOLIC ENGINEERING
START: 01 SEP 2004.
COMPLETION DATE: 31 AUG 2007.
TOTAL BUDGET: $451,000.
PROJECT LOCATION: North Carolina State University, Raleigh, North
Carolina.
OBJECTIVES: The main objective is to use genetically engineered
lignocellulosics as the feedstock for fuel ethanol production. Produce
desirable transgenic trees for ethanol conversion. Establish systems
for high throughput, micro-scale component analysis of treatment
streams. Determine the chemical and enzymatic digestibility of the
transgenic materials and their ability to ferment ethanol, with the
emphasis of using Novozyme's efficient, low cost cellulase cocktail.
Perform cost versus performance studies of sugar/ethanol production
from transgenics with diminished recalcitrance.
(10) ECONOMIC IMPACTS FROM INCREASED COMPETING DEMANDS FOR AGRICULTURAL
FEEDSTOCKS TO PRODUCE BIOENERGY & BIOPRODUCTS
START: 15 August 2003.
COMPLETION DATE: 31 August 2006.
TOTAL BUDGET: $136,000.
PROJECT LOCATION: University of Tennessee, Knoxville, Tennessee.
OBJECTIVES: The overall objective of this proposed project is to
develop a national bioenergy and bioproduct expansion curve. As
bioenergy and bioproduct production increases, demand for, and price of
agricultural products will increase. This analysis will quantify these
expected increases considering various demand quantities of bioenergy
and bioproducts.
(11) REGULATION OF N-ACYLETHANOLAMINE METABOLISM IN SEEDS
START: 01 September 2002.
COMPLETION DATE: 30 September 2006.
TOTAL BUDGET: $145,000.
PROJECT LOCATION: University of North Texas, Denton, Texas.
OBJECTIVES: We propose to continue our efforts to examine the
catabolism of N-acylphosphatidylethanolamine (NAPE) and N-
acylethanolamine (NAE) in plants. Our approach is targeted toward the
functional characterization of candidate NAE amidohydrolase(s) from
several plant sources (Arabidopsis thaliana, Medicago truncatula and
cotton) as well as a detailed characterization of several putative
NAPE-phospholipase D(s) identified in germinated cottonseeds. The
overall goal will be to place this new biochemical and molecular
information into the physiological context of seed development,
germination and seedling growth, stages determined previously to be
active in NAPE/NAE metabolism, in an effort to improve our
understanding of the role(s) of this pathway in plants. Specifically,
to (1) functionally identify and biochemically characterize plant NAE
amidohydrolase(s) (or fatty acid amide hydrolase, FAAH), (2)
functionally identify and biochemically characterize seed-derived NAPE-
phospholipase D(s), and (3) evaluate NAE amidohydrolase and NAPE-
phospholipase D expression during seed development, desiccation,
imbibition, germination, and seedling growth.
(12) VAPOR PHASE BIOREACTORS TO TREAT AIR POLLUTANTS EMITTED FROM CORN-
BASED ETHANOL PRODUCTION FACILITIES
START: 01 September 2003.
COMPLETION DATE: 31 August 2006.
TOTAL BUDGET: $178,500.
PROJECT LOCATION: University of Texas, Austin, Texas.
OBJECTIVES: The primary objective of the project is to develop a
vapor phase bioreactor system specifically optimized to treat the
hazardous air pollutants (HAPs) and volatile organic compounds (VOCs)
emitted from corn-derived ethanol production facilities. Specific
objectives include: (1) Assess the biodegradability of VOC/HAP mixtures
representative of those emitted from ethanol production facilities; (2)
Evaluate the effect of key operating parameters on pollutant removal in
vapor phase bioreactors treating ethanol plant emissions; (3) Evaluate
the feasibility of using a hybrid biofilter/biotrickling filter system
to treat plant emissions.
(13) QUANTITATIVE ASSESSMENT OF CARBOHYDRATE, LIGNIN AND EXTRACTIVE
DEGRADATION PRODUCTS IN PRETREATED LIGNOCELLULOSE
START: 01 September 2003.
COMPLETION DATE: 31 August 2006.
TOTAL BUDGET: $175,000.
PROJECT LOCATION: Baylor University, Waco, Texas.
OBJECTIVES: The overall project goal is to improve fundamental
quantitative understanding of the effect of pretreatment conditions on
the production of a wide range of hydrolysate degradation products.
Objectives to achieve this goal are to: (1) Develop a Liquid
Chromatography-Mass Spectrometry method that will quantify diverse
biomass degradation products and (2) Correlate product concentrations
with pretreatment conditions of temperature, reaction time, pH,
severity, and combined severity.
(14) CELLULASES FOR BIOMASS CONVERSION FROM TRANSPLATOMIC PLANTS
START: 01 September 2005.
COMPLETION DATE: 31 August 2008.
TOTAL BUDGET: $399,963.
PROJECT LOCATION: University of Wisconsin, Madison, Wisconsin.
OBJECTIVES: Enhance translation efficiency leading to higher
expression levels through N-terminal extension addition to three
different cellobiohydrolases. Compare the efficiency of expression of
the three enzymes at the trnI/A locus and trnG/fM locus. Combine
chloroplast-derived cellobiohydrolase expression with existing nuclear-
derived E1cd endoglucanase expression through breeding.
(15) PHOTOSYSTEM I NANOSCALE PHOTODIODES FOR CREATING
PHOTOELECTROCHEMICAL DEVICES
START: 01 December 2004.
COMPLETION DATE: 30 November 2006.
TOTAL BUDGET: $165,000.
PROJECT LOCATION: Vanderbilt University, Nashville, Tennessee.
OBJECTIVES: This project will utilize nanoscale components from
green plants for solar energy conversion, exemplifying the use of
natural resources to promote responsible environmental stewardship by
providing alternative, biobased energy resources for our society. The
overall objective of this project is to create an environmentally clean
and biologically inspired photoelectrochemical device that incorporates
one of nature's optimized nanoscale photodiodes, the Photosystem I
(PSI) reaction center.
II. Competitive awards through the Small Business Innovative Research
Program
Processing of Poultry Manure for Fuel Gas Production.--Advanced
Fuel Research, Inc., East Hartford, CT, $79,849/6 months. The objective
of this phase I research is to convert poultry manure into a usable
syngas fuel. Project completed, received phase II in 2005.
Modified Soybean Oil as a Deposit Control Fuel Additive.--Mountain
View Systems, LLC, Canfield, OH, $80,000/6 months. This phase I project
seeks to produce a fuel additive from soybean oil that will enhance the
performance of biofuels by reducing deleterious deposits formed by
biofuel combustion in engines. Project is ongoing with an extension.
Improved Quality Soy-oil Based Biodiesel Fuel.--BioPlastic Polymers
and Composites, LLC, Midland, MI, $40,000/6 months. The goal of this
phase I project is to improve the process for converting soybean oil
into biodiesel fuel. Project completed, received Phase II in 2005.
Cellulases for Biomass Conversion from the Transgenic Maize
System.--Prodigene, Inc., College Station, TX, $296,000/24 months. The
enzymatic conversion of biomass is limited by the availability and
expense of enzymatic catalysts. This phase II project seeks to develop
an economically feasible method for producing cellulases in industrial
scale quantities with reduced cost. Project is ongoing.
Fiscal year 2005 projects:
Biosolids for Biodiesel.--Emerald Ranches, Sunnyside, WA, $295,606/
24 months. The goal of this Phase II project is to set up a facility
that is capable of extracting oil from canola seed and transforming the
oil into biodiesel fuel through a base catalyzed esterification
reaction. Project is ongoing.
A New Process for Biodiesel Production Based on Waste Cooking Oils
and Heterogeneous Catalysts.--United Environment & Energy, LLC, Orchard
Park, NY, $80,000/8 months. The overall objective of this Phase I
project is to study the feasibility of a proposed new process for cost-
effective production of high value biodiesel from waste cooking oils.
Project completed, applied for Phase II in 2006, pending.
Improved Quality Soy-Oil Based Biodiesel Fuel.--Bioplastic Polymers
& Composites, LLC, Midland, MI, $296,000/24 months. The overall
objective of this Phase II project is to produce biodiesel from fats
and vegetable oils that has better low temperatures flow properties,
such as lower viscosity, is more volatile, and is more resistant to
thermal breakdown than current biodiesels. Project is ongoing.
Lignin-based Polymeric Materials from Byproduct of Biomass
Conversion.--NaSource Company, Newbury Park, CA, $80,000/8 months. The
conversion of agricultural biomass to biofuels produces a waste stream
of materials that require further conversion to create value-added
products and improve the economics of fuel production. The objective of
this Phase I project is to chemically modify certain waste stream
components to produce lignin-based plastics. Project is ongoing with an
extension.
Processing of Poultry Manure for Fuel Gas Production.--Advanced
Fuel Research, Inc., East Hartford, CT, $296,000/24 months. The
objective of this Phase II project is to develop the technology for
converting poultry manure into combustible gases that can be integrated
with various electrical power generation devices and have widespread
agricultural use for poultry manure removal, resource recovery, and
power generation. Project is ongoing.
Improved Anaerobic Digestion of Dairy Manure for Energy and High-
value Co-products.--Andgar Corporation Ferndale, WA, $80,000/8 months.
This Phase I project seeks to develop the anaerobic digestion
technology to convert manure produced by dairy cows into biogas and
high-quality, value-added fiber. Project is ongoing with an extension.
Camelina Sativa.--A Multiuse Oil Crop for Biofuel, Omega-3 Cooking
Oil, and Protein/oil Source for Animal Feed: Great Northern Growers
Cooperative, Sunburst, MT, $80,000/8 months. The objective of this
Phase I project is to evaluate a new crop for the Northern Plains
States that is suitable for economic conversion into biodiesel,
biolubricants, and an omega-3 fatty acid-rich cooking oil for human
consumption. Project is completed, applied for Phase II in 2006, and is
pending.
--High Yield, High Efficiency Bio-refining.--Advanced Materials and
Processes, San Marcos, TX, $79,966/8 months. The objective of
this Phase I project is to develop technology to improve yields
in vegetable oil processing by extracting fatty acids from
vegetable oils and biodiesel without creating emulsions.
Project is completed, applied for Phase II in 2006, and is
pending.
--Ultra-Clean Mobile Incinerator for Chicken Litter/Waste Disposal.--
Mel McLaughlin Company, Upper Marlboro, MD, $80,000/8 months,
The objective of this phase I is to validate the feasibility of
the ultra-clean mobile incinerator for chicken litter/waste
disposal. Project is completed, applied for Phase II in 2006,
and is pending.
--Cost Effective and Reliable Anaerobic Digestion for Agricultural
Byproducts.--Hansen Energy and Environmental, East Garland, UT,
$80,000/8 months. The objective of this phase I project is to
study an anaerobic induced blanket reactor (IBR) system and
verify performance for treating manure and food waste
economically. Project is completed, applied for Phase II in
2006, and is pending.
III. Special Research Grants and Federal Administration Research grants
(1) IOWA BIOTECHNOLOGY CONSORTIUM
The primary goal of this project is to conduct fundamental and
applied research aimed at enhancing the recovery and utilization of by-
product materials from new and emerging biotechnology industries, with
emphasis on agribusiness. Grants have been awarded from funds
appropriated as follows: fiscal year 1989, $1,225,000; fiscal year
1990, $1,593,000; fiscal year 1991, $1,756,000; fiscal year 1992,
$1,953,000; fiscal year 1993, $2,000,000; fiscal year 1994, $1,880,000;
fiscal years 1995-1996, $1,792,000 each year; fiscal year 1997,
$1,738,000; fiscal years 1998-2000, $1,564,000 each year; fiscal year
2001, $1,560,559; fiscal year 2002, $1,530,000; fiscal year 2003,
$1,753,528; fiscal year 2004, $1,789,380; fiscal year 2005, $1,774,688;
and fiscal year 2006, $1,757,250. A total of $30,586,405 has been
appropriated. Research is being conducted at Iowa State University, the
University of Iowa, and various sites throughout Iowa.
(2) FEEDSTOCK CONVERSION
The original goal of this research was to develop the mission of
the Sun Grant Initiative, to identify five leading universities as
regional centers, to plan individual and collaborative activities at
each center, and to establish a working relationship between these
universities and Federal agencies. The work supported by this grant
began in fiscal year 2002, and the appropriation was $560,000 in fiscal
year 2002; $556,360 in fiscal year 2003; $671,017 in fiscal year 2004;
$667,616 in fiscal years 2005; and $668,250 in fiscal year 2006. A
total of $3,123,243 has been appropriated. Research is conducted at
South Dakota State University at Brookings, Cornell University at
Ithaca, University of Tennessee at Knoxville, Oklahoma State University
at Stillwater, and Oregon State University at Corvallis. The
anticipated completion date for fiscal year 2005 funds is September 30,
2006.
(3) BIODESIGN AND PROCESSING RESEARCH CENTER
The Center will address economic viability of farmers, and will
include conversion of agricultural wastes to value-added products. The
Center will also provide educational and outreach programming for
students, farmers, woodland owners and processors in the region. During
the first year of this project, research will focus on converting
animal waste to energy, as a strategy for animal waste management. The
appropriation for fiscal year 2006 is $940,500. The Center is located
at Virginia Polytechnic Institute and State University, Blacksburg,
Virginia. This project will be completed in fiscal year 2009.
(4) BIOMASS-BASED ENERGY RESEARCH
This research addresses conversion of biomass to ethanol, and
chemicals. Through an Oklahoma State University, University of
Oklahoma, and Mississippi State University Consortium, the three
universities are developing an ethanol gasification-bioconversion
process that utilizes all of the plant biomass, including the lignin.
While making the process more cost efficient than other methods of
ethanol production, this process utilizes all portions of a variety of
biomass and feedstock material that includes grasses, crop residues,
and processing plant byproducts. The primary goal is to develop a cost-
effective biomass conversion-to-ethanol production system utilizing a
unique gasification-fermentation process. The work supported by this
grant began in fiscal year 2001, and the appropriation for fiscal year
2001 was $900,016; for fiscal year 2002, $960,000; for fiscal year
2003, $1,142,525; for fiscal year 2004, $1,022,929; for fiscal year
2005, $1,014,816; for fiscal year 2006, $1,188,000. The total amount
appropriated is $6,228,286. This work is carried out at Oklahoma State
University, University of Oklahoma, and Mississippi State University.
This project is expected to be completed in 3 years.
(5) INSTITUTE FOR BIOBASED PRODUCTS AND FOOD SCIENCE
The Biobased Institute funds research projects that increase
profitability of agriculture, enhance human health through improved
nutrition, and reduce reliance on non-renewable energy by production of
biofuels, ethanol and biolubricants. Research activities include
producing ethanol from biomass, and reducing the cost of producing
biodiesel. Technology transfer collaborations have been set up to
ensure efficient transfer to the marketplace for all products under
development at the Institute. The funding for this project began in
fiscal year 2003, and $596,100 was appropriated for fiscal year 2003;
$532,838 for fiscal year 2004; $562,464 for fiscal year 2005; $557,370
for fiscal year 2006. A total of $2,248,772 has been appropriated.
Currently this work is being carried out at Montana State University.
(6) ALTERNATIVE FUELS CHARACTERIZATION LABORATORY
Through a national collaboration, the National Alternative Fuels
Laboratory matches about half of its Federal funding with non-Federal
money to work on industry fuel relevant research. The National
Alternative Fuels Laboratory has developed a Federal Aviation
Administration-certified lead-free ethanol- and biodiesel-containing
alternative to leaded aviation gasoline. The fuel is now commercially
available in South Dakota and will be introduced at airports throughout
the United States in response to increasing demand. They have resolved
ethanol-in-gasoline performance and environmental issues to accelerate
the use of ethanol, and they have initiated new biomass fuel
developments, including processes, to produce Environmental Protection
Agency-approved, high-octane, emission-clean gasoline additives from
agricultural resources. In addition, they have initiated and
coordinated a 27-member Red River Valley Clean Cities Coalition to
increase the number of alternative fuel vehicles in regional public and
private fleets and have built refueling sites for disbursing fuels
containing 85 percent of ethanol in North Dakota. The primary goal was
to develop a database of at-the-pump-sampled conventional,
reformulated, and alternative transportation fuels sold in the upper
Midwest and throughout the United States to enable comparison of
current and historical fuels on the basis of chemical and physical
properties. This fuel database has been expanded to include how
gasoline chemistry affects air quality and fuel performance. The goal
of developing nonfuel products derivable from bio-oils generated via
fast pyrolysis of lignocellulosic biomass was achieved during fiscal
year 2005. Another original goal was to provide information on
conversion of crop residues, agriculture processing wastes, high-
cellulose-content municipal wastes, and other biomass materials to
alternative fuels. The National Alternative Fuels Laboratory program
supported the Red River Valley Clean Cities Coalition, conducted
chassis dynamometer tests comparing three major brand E10 gasoline and
one E8 fuel, and collaborated with the American Lung Association of
Minnesota to assess the greenhouse gas reduction potential of E85 fuel.
The National Alternative Fuels Laboratory began in fiscal year 1991
and was, in part, sponsored by this grant. Federal appropriations in
fiscal year 1991 through fiscal year 1993 were $250,000 per year. Later
awards were $235,000 in fiscal year 1994; $204,000 in fiscal year 1995;
$218,000 per year in fiscal years 1996 through 2000; $258,430 in fiscal
year 2001; $294,000 in fiscal year 2002; $300,037 in fiscal year 2003;
$268,407 for fiscal year 2004; $281,728 in fiscal year 2005; and
$279,180 in fiscal year 2006. A total of $3,960,782 has been
appropriated. The work is performed at the University of North Dakota
Energy and Environmental Research Center in Grand Forks.
(7) AGRICULTURE WASTE UTILIZATION
The original goal was to determine the applicability of anaerobic
digestion to convert organic waste materials to energy in the form of
biogas, thereby reducing the amount of organic matter for disposal. The
goal has gone beyond the testing of waste materials in the digester and
proceeded with a program to determine pathogen reduction by anaerobic
digestion and to economically use the digested sludge. The subsequent
goal is to manage the remaining solids from anaerobic digestion in an
environmentally-sound manner. This research indicates that for at least
cryptosporidium parvum, the thermophilic temperature and the anaerobic
digestion process are critical in the inactivation of the organism.
Field trials of using digester solids for potatoes and broccoli showed
significant increases in growth over the control experiment. The work
supported by this grant began in fiscal year 1998, and the
appropriation for fiscal year 1998 was $360,000; for fiscal year 1999,
$250,000; for fiscal year 2000, $425,000; for fiscal year 2001,
$494,909; for fiscal year 2002, $600,000; for fiscal year 2003,
$685,515; for fiscal year 2004, $617,336; for fiscal year 2005,
$648,768; and for fiscal year 2006, $683,100. A total of $4,764,628 has
been appropriated. Research is conducted at West Virginia State
College, Institute. The principal researchers anticipate the work for
this project will be completed in 2006.
(8) MICHIGAN BIOTECHNOLGY INSTITUTE
The goal of this research is to select and develop market-viable
technologies for the production of industrial products from
agricultural raw materials, and to accelerate development of product
and related technologies that are critical to the sustainability of the
agricultural and rural economy. Accomplishments for 2005 include
optimization of Ammonia Fiber Explosion treatment for conversion of
crop residues for maximum recovery of glucose and xylose sugars,
improved extraction of protein from distillers grains and switchgrass
using an aqueous ammonia process; and identification and cloning of two
genes for enhancing succinic acid production from glycerol-containing
waste streams. Demonstrations of technology occur throughout the United
States. The work supported by this grant began in fiscal year 1989, and
the following amounts have been appropriated: in fiscal year 1989,
$1,750,000; in fiscal year 1990, $2,160,000; in fiscal year 1991,
$2,246,000; in fiscal years 1992-1993, $2,358,000 per year; in fiscal
year 1994, $2,217,000; in fiscal year 1995, $1,995,000; in fiscal years
1996 and 1997, $750,000 per year; in fiscal years 1998-2000, $675,000
per year; in fiscal year 2001, $723,405; in fiscal year 2002, $481,000,
in fiscal year 2003, $623,918; in fiscal year 2004, $558,684; in fiscal
year 2005, $554,528; and in fiscal year 2006, $549,450. A total of
$22,099,985 has been appropriated. The research is being conducted on
the campus of Michigan State University and at the Michigan
Biotechnology Institute. Current objectives are expected to be
completed in fiscal year 2007.
IV. Hatch Act, McIntire-Stennis, and Evans-Allen Projects, the formula
funded projects include about 40 projects with a renewable
energy component for a total amount of approximately $1.3
million for fiscal year 2005. However, the fifteen projects
described below were selected for their innovative and cutting
edge technologies that complement the portfolio of projects
supported through competitive grant programs.
A. FUEL CELLS, HYDROGEN
(1) SYSTEMS FOR BIOLOGICAL PRODUCTION OF HYDROGEN GAS, fiscal years
2004-2008, Oregon State University, Corvallis, Oregon:
The purpose of this project is to develop bacterial strains to
produce hydrogen efficiently and sustainably at high rates. Mutant
strains of Clostridium acetobutylicum and a hydrogen detection method
have been developed. Using microorganisms to produce hydrogen from
water, using sunlight as an energy source, or from renewable
carbonaceous materials, can contribute to meeting
(2) HYDROGEN FUEL PATHWAYS FOR TRANSPORTATION IN CALIFORNIA, fiscal
years 2003-2008, University of California, Davis, California:
Decisions on how to proceed with the use of hydrogen as the fuel of
the future, will have profound implications for the economy and for
society. This project addresses decision-making based on sound
knowledge from a wide variety of disciplines. The primary focus is the
manufacture, storage and distribution of hydrogen for use in fuel cell
vehicles. On-going research includes developing lifecycle environmental
analysis models, innovative approaches to measure potential demand for
hydrogen vehicles and designs for hydrogen energy stations. The outcome
will be a set of tools and a body of knowledge to inform public sector
debates and private sector investments.
(3) BIOENERGY BASED ELECTRICAL SYSTEMS AND THEIR SAFE, EFFICIENT
APPLICATIONS, fiscal years 2003-2008, Michigan State
University, East Lansing, Michigan:
The purpose of this study is to develop specifications for
installation and economic analysis of alternative systems to convert
biogas to electrical energy. A coalition of organizations has been
formed to address the conversion of livestock biomass to energy in
stationary fuel cells. Proposals have been submitted to the National
Electrical Code to address inadequate rules for the installation of the
direct current portion of renewable energy production systems. If
proposals are accepted, the result will be practical and safe rules.
(4) FEASIBILITY STUDY TO ANALYZE THE ECONOMIC VALUE PROPOSAITON AND
RELATED MARKETING STRATEGY FOR A MODULAR, PRESSURIZED ANAEROBIC
DIGESTION, fiscal years 2004-2005, Cornell University, Ithaca,
New York:
Biogas, i.e. methane, from traditional anaerobic digestion
technology is typically produced at atmospheric pressure, with little
attempt made to harness this energy source for compressed natural gas
or for application to fuel cells for stationary power generation. A
novel design for producing biogas has been developed that delivers pure
and compressed biogas that is promising for these applications. The
current focus is on evaluating the commercial potential of this new
technology for New York State dairy farms, and for farming economics
and public policy. This technology offers a sustainable strategy to
problems associated with animal manure management.
B. AGRICULTURAL RESIDUES, WASTES
(1) BIOFUELS PRODUCTION FROM COTTON GIN WASTE AND RECYCLED PAPER
SLUDGE, fiscal years 2005-2010, Virginia Polytechnic Institute,
Blacksburg, VA:
Cotton gin waste can potentially be used ethanol production. Unlike
other lignocellulosic feedstocks, this material is concentrated at the
processing sites and therefore harvesting and transportation costs are
considerably less than those for other agricultural and forestry
residues. This project is developing an in situ detoxification process
for the bioconversion of cotton gin waste and recycled paper sludge
mixture into ethanol at high yields. Processing of agricultural
residues is a value-added activity and will assist in implementing new
ethanol production capacity in the southern United States.
(2) BIOLOGICAL CONVERSION OF CROP RESIDUES TO FUELS AND CHEMICALS,
fiscal years 2005-2008, North Carolina A&T State University,
Greensboro, North Carolina:
This project addresses the biological conversion of crop residues
to ethanol, hydrogen and succinic acid. Pretreatment steps include
physical and chemical treatment followed by enzymatic hydrolysis and
anaerobic fermentation. Economic and environmental evaluations will be
conducted to validate commercialization potential.
(3) ANEROBIC DIGESTION OF AGRICULTURAL AND FOOD WASTE BIOMASS FOR THE
EFFICIENT PRODUCTION OF HIGH QUALITY BIOGAS, fiscal years 2004-
2008, Ohio State University, Wooster, Ohio:
This research is developing a laboratory scale anaerobic digestion
system to determine the metabolic and nutritional requirement of
digesters for efficient conversion of diverse biomass feedstocks to
biogas energy. Feedstocks used include dairy cattle manure, corn and
potato based snack foods and corn silage. Biogas production must be
clean and reliable for process heat, combustion or turbine engines, or
solid-oxide fuel cells. A closed anaerobic digestion system of
agricultural wastes offer the opportunity to produce a clean form of
fuel, methane and/or hydrogen, with minimal environmental emissions of
ammonia, methane and fossil fuel based carbon dioxide.
(4) PROCESSING OF NON-TRADITIONAL AGRICULTURAL MATERIALS FOR VALUE-
ADDED UTILIZATION, fiscal years 2004-2009, Auburn University,
Auburn Alabama:
The purpose of this project is to develop procedure and methodology
for the pelleting of poultry litter and energy crops, and to quantify
the storage and handling of the manufactured pellets. This project is
also testing the pelleted materials as a biofuel in a pellet furnace.
Results to date indicate that energy saving up to 30 percent can be
obtained with the use of a biofuel furnace in a greenhouse. The ash
obtained from pellet combustion has value as s substrate component.
Pelleted biofuels provide obvious environmental benefits such as use of
wastes from agro-processing, reduced greenhouse gas emissions and
potential on-site generation of fuel.
(5) MICROBIAL CONVERSION OF AGRICULTURAL WASTES TO ELECTRICITY, fiscal
years 2003-2004, University of Massachusetts, Amherst,
Massachusetts:
The purpose of this study is to determine whether a microbe-
electrode system could be used to degrade compounds that are an odor or
environmental concern in animal wastes and at the same time provide
electrical power that could be applied to farm operations. Fuel cells
inoculated with swine waste have been shown to produce less methane and
to eliminate butyrate faster than controls. Ongoing research will
define under what conditions organic loads are lessened by the presence
of electrodes in both fuel cell and potentiostat mode. In addition,
analysis of the microbial community associated with the graphite
electrodes will provide further insight into the mechanism of swine
waste treatment.
C. NEW ENERGY CROPS
(1) CARBON AND NITROGEN CYCLING AND MANAGEMENT IN ALTERNATIVE CROPPING
SYSTEMS, fiscal years 2004-2007, Washington State University,
Pullman, Washington:
Agricultural activities impact nitrate contamination of groundwater
and particulate emissions. Alternative cropping systems can lessen
negative impacts and expand environmental benefits. This project
includes determining the biomass production and partitioning of Giant
Reed, Arundo donax, at rain-fed and irrigated locations in Washington
State. Results to date show biomass production potential greater than
20 dry tons per acre in the second year, with hemicellulose and
cellulose contents similar to other grasses. Variations in wheat
cultivars and exotic species are being evaluated to identify
economically and environmentally sound cropping options for supplying
bioenergy feedstocks.
(2) AGRICULTURAL AND ENVIRONMENTAL BENEFITS FROM ENERGY, FIBER AND
FORAGE CROPS IN ALABAMA, fiscal years 2003-2008, Auburn
University, Auburn, Alabama:
This project addresses biomass crops and cropping-livestock
production systems to realize agricultural and environmental benefits
for the southeastern United States. Small plot experiments are underway
and include switchgrass, mimosa, giant reed, fescue, ryegrass, and a
comparison of productivity of goats and stocker cattle. This research
will lead to commercialization of bioenergy in Alabama, especially co-
firing biomass with coal to produce electricity.
(3) SUGARCANE IMPROVEMENT FOR ARID, ALKALINE ENVIRONMENTS, fiscal years
2000-2006, Texas A&M University, College Station, Texas:
This project is developing sugarcane as an energy crop through a
conventional breeding and genetic engineering program. Sugarcane has
been crossed with Miscanthus, a perennial grass that is promising as an
energy crop, and has cold resistance and good fiber quality. New
sugarcane varieties will allow the grower to increase production,
reduce costs, and expand into the renewable energy market.
D. COMMODITY ENERGY CROPS
(1) VALUE-ADDED PRODUCTS FORM AGRICULTURAL COMMODITIES, fiscal years
2004-2009, Purdue University, West Lafayette, Indiana:
This research is addressing the use of mixtures of soybean methyl
esters, i.e. biodiesel, with jet fuel, quantifying the physical
properties and measuring turbine jet engine combustion performance and
emissions. Aviation jet fuels are a unique energy fuel market due to
the critical nature of fuel weight/energy density required for jet
flight. A key performance limitation of soy methyl esters is the very
low freezing point required for jet fuel. This project has developed a
fractionation technology that removes the saturated components to
produce workable fuel blends with existing jet fuels. The byproduct of
biodiesel production is glycerin. This project is also evaluating the
use of glycerin for aviation deicers to replace ethylene/propylene
glycol deicers. The fractionation process and glycerin deicer product
are being patented and Purdue is working with industrial partners to
commercialize the technologies.
E. ECONOMICS
(1) ECONOMIC ASSESSMENT OF CHANGES IN TRADE ARRANGEMENTS, BIOTERRORISM
THREATS AND RENEWBLE FUELS RQUIREMENT IN THE U.S. GRAIN AND
OILSEED SECTOR, fiscal years 2004-2009, Iowa State University,
Ames, Iowa:
This project includes analyzing the effect of U.S. renewable energy
programs as one of several factors that affect international trade and
markets for corn, soybeans, and wheat. The impacts of energy policy
changes on grain and byproduct markets that include gluten feed and
distillers' grain are being addressed, along with the effects of the
expanding bioenergy industry on the organization and performance of
local and international grains markets. Specific studies include
pricing in local and international grain markets, and international
competitiveness of the ethanol industry compared to Brazil and the
appropriate scale and organization of value-added processing. Improved
private investment and public policy decisions will result from better
information about the bioenergy industry.
(2) RURAL COMMUNITIIES, RURAL LABOR MARKETS AND PUBLIC POLICY, fiscal
years 2002-2007, Virginia Polytechnic Institute, Blacksburg,
Virginia:
Rural America is experiencing substantial demographic and economic
change and its future depends on solid policy analysis. This project
examines how rural markets adjust to economic change and how policy can
be formulated assist in these adjustments. Findings indicate that
several sources of renewable fuels could be viable in Virginia.
Biomass, particularly electricity generation through switchgrass and
wood chips has more widespread viability than wind or solar
technologies. Biofuels could provide additional incomes to land owners
in depressed areas, but overall economic impacts are likely to be
modest. Further research is needed to overcome persisting technical
problems with switchgrass transport and processing leading to higher
costs and lower competitiveness. It is estimated that a single 600
megawatt coal-fired power plant that co-fires with 5 percent
switchgrass could improve the financial viability of 140 families and
have total economic impacts of more than $2 million per year.
______
Questions Submitted by Senator Arlen Specter
Question. With the dairy industry responsible for cash receipts of
$27,367,857,000 (2004) representing 11.3 percent of total agriculture
cash receipts for the Nation, why is the Agricultural Research Service
terminating the Dairy processing and products Research Unit located at
Wyndmoor, Pennsylvania, when this is the only USDA laboratory
conducting research on dairy processing and products? In addition, it
is my understanding that the scientists assigned to this laboratory
have the capability of addressing the issue of bio-security research to
help prevent the intentional contamination of the milk supply and
support the dairy industry with research on prevention and removal of
threat agents from the milk supply. How will this crucial research be
accomplished if this program is eliminated?
Answer. The consideration to close the lab was based on the fact
that the unit has largely met its objectives and the return on
investment was lower than for other high priority areas of research. As
mentioned, the need for the research is reduced due to improvements in
milk processing, much of which has been developed by the lab. If
additional work in the area of dairy processing does arise, such work
could and has been done in the past at the ARS Beltsville Agricultural
Research Center (Beltsville, Maryland) or the National Animal Disease
Center (Ames, Iowa).
PEST MANAGEMENT ALTERNATIVES
Question. This question is directed to Under Secretary Jen
regarding a letter that Sen. Rick Santorum and I sent to you on
February 17, 2006. Pennsylvania is the Nation's number one producer of
mushrooms, producing 59 percent of all pounds grown and valued at more
than $420 million. Trichoderma green mold remains the most serious
disease faced by mushroom growers, as crop losses can quickly reach
epidemic levels. Both Sen. Santorum and I urge you to strongly support
the research proposal, ``Resistance Management Program for Trichoderma
Green Mold on Mushrooms,'' submitted by Drs. Peter Romaine and Daniel
Royse, at The Pennsylvania State University, under the Special Grants
Program--Pest Management Alternatives. This was all detailed in our
February 17 letter.
Are you taking this research proposal under serious consideration
and when can we expect a response to our letter?
Answer. In his response dated April 3rd, 2006, former Under
Secretary Jen indicated that funds appropriated for the Pest Management
Alternatives Program, which is administered by the Cooperative State
Research, Education, and Extension Service, are distributed through a
peer review competitive grants process. Priorities for the program are
developed in consultation with stakeholders and land-grant university
partners through the Regional Integrated Pest Management Centers. A
major emphasis of this program is cropping systems where the loss of
pest management alternatives has led to a loss of pest control or the
development of pest resistance to the alternatives. The proposal from
the Pennsylvania State University received full and fair consideration
by the peer review panel. Applicants will be notified in the coming
weeks of final funding decisions under the fiscal year 2006 Pest
Management Alternatives Program.
COUNTY OFFICE RESTRUCTURING
Question. The Farm Service Agency (FSA) had intended to implement
``FSA Tomorrow'' last Fall. This plan intended to reduce the number of
FSA county offices throughout the entire Nation through consolidation.
Across the United States, 713 county offices were planned to be
consolidated, in Pennsylvania alone 14 offices were planned to be
consolidated bringing the number of offices to 32. While I understand
the importance of efficiency, farmers work hard all day and to require
them to drive long distances to see their FSA office puts further
strain on their work. Under Secretary Penn, the FSA fiscal year 2007
Budget request is $33,891,000, down from the fiscal year 2006 budget
estimate of $36,797,000; a decrease of about 8 percent.
Does the Department of Agriculture intend to implement a
consolidation plan in light of the reductions in the President's fiscal
year 2007 Budget request?
Answer. FSA has asked our State Executive Directors (SEDs) to
conduct an independent, local-level review of the efficiency and
effectiveness of FSA offices in their State. Each State's SED and State
Committee will form a review team to identify the State's optimum
network of FSA facilities, staffing, training, and technology within
existing budgetary resources and staffing ceilings.
There is no comprehensive national plan or formula for the ideal
field structure. Each State will review its own county office system
and submit a plan for the best distribution of resources.
Each SED is exploring potential joint-effort opportunities with the
Natural Resources Conservation Service (NRCS) and other Department of
Agriculture (USDA) agencies. State Food and Agriculture Councils
(SFACs) are the primary vehicles for coordinating programs at the local
level. SFACs provide a policy-level, cross-agency, decision-making and
communication forum to achieve USDA's goals and objectives. In
accordance with the SFAC mission, FSA, NRCS, and other agencies will
work together to develop the plan for the most effective mix of local
offices, staffing, training and technology.
If FSA county office closures create a disadvantage for some
producers in accessing services, those producers may request a new
administrative county office if there is one that will be more
convenient. The flexibility of producer choice is an important part of
consolidation efforts. FSA is committed to delivering farm program
services through the Service Center model.
Question. If so, does the Department plan on bringing this to the
attention of Congress before any implementation takes place?
Answer. After recommendations are received from a State and
validated by FSA's Deputy Administrator for Field Operations, any
consolidation recommendations will be shared with the potentially
affected Congressional delegation. The Agency will hold public hearings
and coordinate communications efforts with area farmers, ranchers, and
other stakeholders. Where a decision is made to consolidate offices,
Congress will be notified 120 days before a closure takes place. FSA is
committed to a continued dialogue with congressional delegations and
State leaders as to how best to modernize the FSA county office system.
MUSHROOM SPAWN
Question. I have been contacted by mushroom spawn manufacturers in
my state regarding their difficulties in exporting mushroom spawn to
certain countries which require phytosanitary certificates, for which
mushrooms spawn is apparently ineligible. It is my understanding that
many countries require U.S.-exported spawn to be accompanied by APHIS-
issued phytosanitary certificates; however APHIS cannot issue
certificates for this product. This situation is especially problematic
since governments of foreign competitors are willing to issue such
certificates. Therefore, American spawn manufactures are unable to
obtain the necessary phytosanitary certificates, whereas foreign
competitors can obtain them. As a result, our Nation's mushroom spawn
exporters are in danger of losing access to some of their most valuable
export markets, valued at more than $8.7 million. Maintaining access to
export markets is vital to the spawn industry in Pennsylvania and
across the country.
How do you intend to resolve this problem and when can constituents
in my home State expect a solution?
Answer. As you indicate, several countries require phytosanitary
certificates for mushroom spawn. However, the countries in question
(including China, Oman, and several others) have not provided
information on what pests are associated with mushroom spawn that are
of concern to them or of quarantine significance. Phytosanitary
certificates are generally used to provide assurance that a shipment or
product is free of specified pests, usually a list of quarantine pests
provided by the importing country. Accordingly, APHIS is not able to
issue phytosanitary certificates for this product since it is
essentially grain inoculated with a fungus and there are no known
quarantine pests associated with it. Our officials sent letters to the
countries explaining that we cannot issue phytosanitary certificates
without knowing what to certify the product for. We also explained
APHIS policy regarding the import of mushroom spawn into the United
States (the genus and species must be identified on the commercial
invoice and the shipment must be free of soil) and officially requested
that they adopt equivalent policies. In late March 2006, officials from
APHIS and USDA's Foreign Agricultural Service met with the American
Mushroom Institute to discuss this situation. We believe that the
importing countries are more concerned with product quality than with
plant health risk. In addition to working with our counterparts in the
importing countries regarding their requirements, we are also working
with USDA's Agricultural Marketing Service to find an alternative to
phytosanitary certificates for mushroom spawn exports.
______
Questions Submitted by Senator Herb Kohl
SIMPLIFIED SUMMER FOOD PROGRAM
Question. Mr. Bost, as you know, the Simplified Summer Food Program
is currently available in half of the States, including my home State
of Wisconsin. Have States that participated in this program attracted
more program sponsors, operated more program sites and served more low-
income children than those States not participating in the program?
Would USDA consider this program a success? Would USDA be supportive of
expanding this program to additional States?
Answer. States participating in the Simplified Summer Food Program
have shown an increase in participation as measured by sponsors, sites,
and meals served to eligible children during the summer months. During
the same time, those States not participating in the program have
experienced a decrease in each of the corresponding categories.
However, since the inception of the Simplified Summer Food Program,
many States have also had the opportunity to operate a seamless summer
feeding program through the National School Lunch Program (NSLP).
Because these two initiatives have operated concurrently in these
States, we are not able to identify the extent to which changes in
sponsors, sites, and children result from the Simplified Summer Food
Program, from the NSLP seamless summer feeding program, or from a
combination of both.
Although modest, there are costs associated with expanding the
program to additional States. Assuming appropriate offsets could be
found, USDA would support expansion of the program because it reduces
paperwork burden on sponsors and aligns the program's meal
reimbursement procedures with our school-based and day care-based Child
Nutrition Programs.
NSA GRANTS
Question. Mr. Bost, one of the hallmarks of the WIC program is that
it goes beyond providing healthy foods to provide participants with
nutrition education, breastfeeding support, and health care referrals.
These services are a critical complement to the WIC food package and
they are all funded with NSA grants. The WIC program has also achieved
extremely effective cost-containment, particularly with regard to
infant formula costs. The administrative costs associated with these
accomplishments are funded with NSA grants.
In a 2001 report, the GAO found that since the late 1980s important
new nutrition services and administrative demands have been placed on
State and local WIC agencies without accompanying increases in NSA
funds. Isn't it the case that under WIC's authorizing statute NSA
grants per-participant have remained at the same inflation-adjusted
level for the past 19 years? If this proposal is not adopted, will your
request level for WIC still be adequate? What effect do you believe
this administrative proposal will have on cost-containment?
Answer. In 1990 the guaranteed per participant nutrition services
and administration (NSA) grant was $9.32. Adjusting the grant for
inflation resulted in a guaranteed NSA grant of $14.12 in fiscal year
2006.
If this proposal is not adopted, the funds requested in the budget
for food will be approximately $152 million less than the estimated
amount needed to provide food benefits to a monthly average of 8.2
million WIC participants in fiscal year 2007.
We believe this proposal will encourage State agencies to seek cost
saving practices and efficiencies in program management and in
providing participant services funded with NSA grants.
SPECIAL SUPPLEMENTAL PROGRAM FOR WOMEN, INFANTS, AND CHILDREN (WIC)--
LEGISLATIVE PROPOSAL
Question. Mr. Bost, another legislative proposal included in the
WIC account will prevent any State from allowing participation in the
WIC program to anyone whose family income is more than 250 percent of
poverty. How many States will this affect? Will it save any money? Is
it true that the affected States, because their WIC participants are
automatically deemed eligible, will have to re-check the eligibility of
all of their participants? How many individuals would lose eligibility
for WIC if the Administration's proposal to limit Medicaid adjunct
eligibility were adopted? Do you intend to provide additional
administrative funding for these States to conduct these eligibility
exercises, or is the intent that they perform this function under the
proposed new administrative limitations as well?
Answer. The President's fiscal year 2007 budget prohibits the use
of funds to provide WIC benefits to individuals who receive Medicaid or
who are members of a family in which a pregnant woman or infant
receives such assistance unless the family income is below 250 percent
of the poverty guidelines. Six States (Maryland, Minnesota, Missouri,
New Hampshire, Rhode Island and Vermont) have income eligibility cut-
offs for Medicaid that are 250 percent or above for some or all
categories of potential WIC participants.
Based on the estimated per-person cost in fiscal year 2007
($52.67), it is estimated that this proposal will result in a savings
of $2.9 million. The States affected by this proposal and the estimated
savings per State are shown in the table below.
------------------------------------------------------------------------
Number of Estimated
State Persons Savings (in
Affected thousands)
------------------------------------------------------------------------
Maryland................................ 859 $543
Minnesota............................... 2,434 1,538
Missouri................................ 573 362
New Hampshire........................... 143 90
Rhode Island............................ 286 181
Vermont................................. 286 181
-------------------------------
Total............................. 4,581 2,895
------------------------------------------------------------------------
The President's budget proposal would continue to provide automatic
(adjunctive) income eligibility based on participation in Medicaid to
the vast majority of WIC participants certified in this manner. Any
mother, infant, or child who can currently be certified as income
eligible for WIC through Medicaid, will still be income eligible for
WIC if their household income is below 250 percent of poverty. For
those State agencies affected by the proposal, they will have to modify
their procedures to determine the income eligibility of individuals who
would have otherwise been automatically income eligible to participate
in the WIC Program based on their participation in Medicaid. Based on
data from the 2004 Report on WIC Participant and Program
Characteristics, we estimate that approximately 4,600 individuals will
be affected by the proposal to limit automatic eligibility based on
participation in Medicaid to those individuals with an income level
that is below 250 percent of Federal poverty guidelines.
Affected States may incur a modest increase in the needed
administrative resources associated with eligibility determinations and
will have to re-allocate their nutrition services and administration
(NSA) funds accordingly. The proposal will not increase Federal
expenditures on NSA.
WIC MANAGEMENT INFORMATION SYSTEM
Question. Last year, we provided $20 million for a new WIC
Management Information System, which we have heard for several years is
desperately needed. We made the money contingent on WIC caseload being
met, and it seems as though that requirement will be met this year. Has
USDA yet, or do you plan to, release this money this year?
Answer. The fiscal year 2006 appropriation provided $19.8 million
(after the 1 percent rescission) for management information systems
(MIS) if it was determined that adequate funds were available to meet
caseload requirements without the use of contingency funds. Based on
current projections of both food package costs and participation for
the remainder of fiscal year 2006, we do not anticipate the need to use
contingency funds to support WIC caseload. Therefore, we fully intend
to allocate the $19.8 million in MIS funding during fiscal years 2006
and 2007 to WIC State agencies for critical MIS projects.
CSFP
Question. Mr. Bost, as you know, the CSFP program is slated for
elimination under the President's budget. Reasons USDA believes this is
appropriate, as explained by Secretary Johanns, include the fact that
seniors can move to Food Stamps, there simply isn't enough money, and
the program operates only in a limited number of States. Is CSFP the
only nutrition program that operates in a limited number of States? How
many States currently have CSFP programs? How many, and which States
have approved plans and would join if there was funding available? Is
it fair to say that this program has limited participation by States
because of funding, and not because States don't want it?
Answer. The CSFP is not the only nutrition assistance program that
operates in a limited number of States. The Fresh Fruit and Vegetable
Program (FFVP) and the WIC Farmers' Market Nutrition Program (FMNP)
also operate in a limited number of States. The FFVP is currently
authorized to operate in a limited number of schools in limited number
of States and Indian Tribal Organizations (ITOs); currently 14 States
and 3 ITOs. Funding is commensurate with the number of participating
States and ITOs. The FMNP operates in 45 locations (37 States, D.C.,
Puerto Rico, Guam and 5 ITOs). While new State agencies may apply to
participate, appropriations have been commensurate with the number of
currently participating States which precludes the expansion of the
program to new States.
CSFP currently operates in limited areas of 32 States, two Indian
reservations, and the District of Columbia. Five States have approved
plans for CSFP but are not yet participating: Delaware, Arkansas,
Oklahoma, New Jersey, and Utah. CSFP's participation by States is
currently limited because of funding.
Question. Mr. Bost, I understand that under the Commodity
Supplemental Food Program, States are required to order their food
several months in advance. Do you plan to allow States to go ahead and
place orders for food for next year? What does USDA plan to do if there
is a continuing resolution? If the entitlement purchases from farmers
that currently go to the CSFP program end, is it safe to assume that
farmers will lose money?
Answer. While the President's fiscal year 2007 budget request does
not include funding for the CSFP, the program will continue to be
administered in a manner that ensures program continuity until such
time that Congress decides not to fund the program. Should Congress
choose to adopt the President's fiscal year 2007 budget request,
commodities remaining in CSFP inventories next fiscal year will be
redonated for use in other programs, including the Emergency Food
Assistance Program.
We anticipate no impact on the agriculture sector from the
elimination of CSFP. Food purchases that result from agricultural
support activities will be maintained, but distributed through other
channels.
WIC MORATORIUM
Question. Mr. Bost, last year's reauthorization legislation
included measures to contain costs in these and other high-priced
stores. We knew, however, it would take time for those provisions to be
implemented. To contain costs in the meantime we included in last
year's appropriation law a moratorium on the approval of any new WIC-
only stores. We considered such a measure critical; in its absence,
this committee would have faced even greater pressure on our limited
resources. Can you please tell us whether this moratorium has helped
contain WIC food costs and whether extending the moratorium will help
to contain food costs next year? Why do you believe it is necessary to
maintain the moratorium again this year, since the cost containment
regulations have been in place for several months?
Answer. We proposed a moratorium to provide States with adequate
time to implement the newly enacted cost containment provisions of the
Child Nutrition Act. It is difficult to know for certain how the
moratorium has affected food costs due to limitations on the data we
have available and the multiple factors that influence State agency
food expenditures in any given year. Although the reasons for changes
in average food package costs are complex, it is likely that the
moratorium contributed to holding food costs down in fiscal year 2005.
We know that the 6 State agencies with the largest number of WIC-only
stores experienced food package cost increases ranging from 3.5 percent
to 14.2 percent between fiscal year 2003 and fiscal year 2004. Between
fiscal year 2004 and fiscal year 2005, 3 of these State agencies
experienced a decrease in the average food package cost, and three had
a lower rate of increase than in the previous year.
At present we are optimistic that all State agencies that require
certification will submit requests before September 30, 2006, and that
all or most will receive certification by this date. Progress toward
this goal was delayed for several months following the publication of
the WIC Vendor Cost Containment Interim Rule on November 29, 2005. This
rule implements the vendor cost containment certification requirement
found in section 17(h)(11) of the Child Nutrition Act. From December
28, 2005 through February 23, 2006, FNS was under a temporary
restraining order (TRO) due to a lawsuit filed by the National Women,
Infants and Children Grocers' Association and other plaintiffs to
prevent implementation of the Interim Rule. The TRO interrupted State
agency submission of requests for certification and FNS decisions on
certification. Since the dismissal of the lawsuit on February 23, 2006,
FNS has moved expeditiously to certify the State agencies that meet the
certification requirements, and to provide technical assistance to
others that are still in the planning process. In addition to the
requests for certification that are currently being reviewed, FNS
expects to receive nearly a dozen more between mid-April and the end of
September 2006 (including California's, the State with the largest
number of WIC-only stores). We are making every effort to certify State
agencies before the end of the fiscal year. Extension of the current
moratorium prohibiting the approval of new ``WIC-only'' stores until a
State agency receives certification would ensure that the number of
such vendors does not increase before State agencies implement improved
cost containment methods.
WIC REAUTHORIZATION LEGISLATIVE PROPOSAL
Question. The 2004 reauthorization legislation added section
9(b)(8) to the Richard B. Russell National School Lunch Act, which
specifies that all communications with households regarding
certification or verification for free or reduced price meals must be
in an understandable and uniform format and, to the maximum extent
practicable, in a language that parents can understand. FNS has already
provided model application and verification materials that reflect the
changes to the certification and verification processes made by
reauthorization in English and Spanish. In which additional languages
will translations be provided and when will they be available?
Answer. The household application is already published in English
and has been translated into Spanish. Both are available on our Web
site found at http://www.fns.usda.gov/cnd/FRP/frp.process.htm. The next
round of translations will include: Russian, Vietnamese, Chinese
(Mandarin), Japanese, Serbo-Croatian, Arabic, Korean, Somali,
Cambodian/Khmer, French, Hmong, Haitian Creole, Laotian, Polish,
Portuguese, Sudanese, Thai, Urdu, Hindi, Kurdish, Farsi, Greek, Samoan,
and Tagalog. All 25 translations of the English version of the
application are expected to be finished in time for use in the 2006-
2007 school year.
Question. We are aware that FNS has issued general guidance
alerting States and school districts to this new provision. We are also
aware that many households never respond to the request for eligibility
verification and we want to be sure that families get the information
they need to comply with the verification process. Please describe any
manuals or other technical assistance materials that FNS has provided
to local school districts clarifying the kinds of steps they are
expected to take during the certification and verification processes to
comply with section 9(b)(8). Has FNS reviewed materials in use by
States and school districts to assess whether they comply with this
provision and provide them with the assistance they need to come into
compliance?
Answer. FNS has issued 14 guidance memos to the State agencies
concerning the National School Lunch Program (NSLP) free and reduced
price applications, certification and verification, eight of which
specifically deal with verification. The goal of each of these memos is
to ensure that school food authorities are fully aware of the new
provision, understand completely the requirement to follow-up when a
request for verification goes unanswered, and that schools and families
have the necessary information in order to comply with verification
requests.
FNS has updated its Guidance for Coordinated Management Evaluations
of State Agency Operations to include the new provisions in the
Reauthorization Act, including the new verification procedures as
required by the Child Nutrition and WIC Reauthorization Act of 2004. As
part of the management evaluation process, FNS reviews State agencies
and the materials they use in their review of school food authorities
to ensure that they comply with the new verification requirements.
FARMERS' MARKET NUTRITION PROGRAM
Question. It is my understanding that States grants for the Farmers
Market Nutrition Program have decreased this year. Is this accurate,
and if so, why, considering the appropriated amount did not decrease?
How much will the carryover be for the Farmer's Market Nutrition
Program this year? How does this compare to the past 3 years?
Answer. It is important to include the effect of prior year unspent
funds when analyzing funding for the WIC FMNP. We anticipate
approximately $3-4 million in unspent fiscal year 2005 funds will
become available after closeout is completed which can supplement the
appropriated funds, thus bringing State agencies close to their actual
expenditure levels in fiscal year 2005.
In fiscal year 2005, in addition to appropriated funds, we had
available unspent prior year funds that were allocated to State
agencies at the beginning of the fiscal year. Subsequently in fiscal
year 2005, additional unspent prior year funds became available that
were allocated to State agencies. For FMNP base grants for fiscal year
2006, only available appropriated funds have been made available.
Additional funds recovered from 2005 should be made available by early
summer, 2006.
In fiscal year 2005, $8.4 million in unspent funds were available
to supplement the appropriation of $19.8 million. In fiscal year 2004,
$5 million in unspent funds were available to supplement the $22.8
million appropriation.
FRUIT AND VEGETABLE PILOT PROGRAM
Question. As you know, last year we provided funding for an
additional 6 States to join the Fruit and Vegetable Pilot Program. How
much money would be required to extend the participation by these
States through the next school year?
Answer. No funding will be needed to extend the program to these
States through school year 2006-2007 because the extension will be
covered by existing funds appropriated on November 10, 2005, for the
period January 30, 2006 through June 30, 2007. After June 30, 2007,
however, funds will be needed should Congress wish to continue the
program in these 6 States.
WILDLIFE SERVICES
Question. What is APHIS Wildlife Services currently doing to reduce
the effects the double-crested cormorant has on the Great Lakes fishery
and how can we get them to expand their work to other highly impacted
areas in the State?
Answer. APHIS is currently conducting double-crested cormorant
damage management activities in the Great Lake States of Michigan,
Minnesota, New York, and Ohio. We are also conducting an environmental
analysis in Wisconsin to determine the potential impacts of expanding
our activities to that State. In addition, we are cooperating with
several State, Federal, tribal, and Canadian agencies to survey Great
Lakes breeding populations. The breeding population of Double-crested
Cormorants on the Great Lakes has increased dramatically--from 89 in
1970 to approximately 115,000 pairs in 2005. Also, APHIS continues to
cooperate in satellite telemetry to monitor and assess regional
movements in conjunction with diet and foraging studies.
Question. Would increasing control in the Great Lakes, a prime
breeding ground for the double-crested cormorant, help reduce the
number of cormorants currently decimating aquaculture facilities in the
southern United States?
Answer. Yes, increasing control in the Great Lakes would help
reduce the number of cormorants currently decimating aquaculture
facilities in the southern United States. We have assessed the
migratory path of double-crested cormorants. Using satellite telemetry
and band recovery data, we observed the winter movement of these birds
from the Great Lake Region to aquaculture facilities in Alabama,
Arkansas, Louisiana, and Mississippi. We do expect that increased
control activities in the Great Lakes would reduce the wintering
population in the South and lessen the impact to the aquaculture
industry and the environment.
Question. Does APHIS Wildlife Services have enough resources to
successfully control the Great Lakes breeding population of double-
crested cormorants?
Answer. Our current resources allow us to respond to the immediate
short-term needs of States and industry--such as removing birds from a
site.
STANDARDIZATION
Question. On January 26, I wrote to Secretary Johanns encouraging
the UDSA to act expeditiously to establish a grass-fed label standard
for red meat. This proposal has been in the works for some time.
When can we expect the Department to act on this proposal?
What steps can the Department take to make sure that the program is
affordable for producers?
Answer. Developing a label standard for the grass-fed marketing
claim is a priority of the Agricultural Marketing Service (AMS) and we
have been working closely with the industry to develop a workable and
usable standard that would serve the grass-fed market. AMS has obtained
input from a number of individual experts within government, industry,
and academia while drafting the revised proposed standard and its
corresponding threshold. We have finalized the development of the
revised standard, and it is expected to be published in the Federal
Register this spring.
Every effort will be made to administer this voluntary program
cost-effectively. To validate the marketing claim associated with this
production activity, AMS will conduct verification activities in
accordance with procedures that are contained in Part 36 of Title 7 of
the Code of Federal Regulations for Processed Verified Programs. This
approach to verification of marketing claims makes for the best
utilization of government resources on a cost recovery basis while
providing for integrity of the program.
NATIONAL VETERINARY MEDICAL SERVICES ACT
Question. The National Veterinary Medical Services Act (Public Law
108-161) was funded in the fiscal year 2006 Agriculture Appropriations
bill. What steps have been taken to implement this program? When can we
expect those steps to be completed?
Answer. USDA is exploring potential financial management strategies
both within the Department and in collaboration with other Federal
agencies in order to effectively run a loan repayment program. To
evaluate these and other programmatic issues presented by the National
Veterinary Medical Services Act--NVMSA, CSREES has constituted the
NVMSA working group to develop potential program management strategies.
The working group has met on four occasions and is exploring
alternative strategies for managing the NVMSA. A draft program
management proposal is presently being reviewed. We are working to
ensure a well thought-out program plan which includes collaborations
with veterinary schools and other stakeholders to develop research-
based consensus regarding the candidate eligibility requirements, and
metrics to support prioritized and weighted needs within the veterinary
need areas identified within the Act.
AVIAN INFLUENZA
Question. Late last year, you were provided more than $90 million
in supplemental funds to prepare against avian flu, a small part of the
total avian flu supplemental.
It is apparent this is both a public health and an agricultural
issue. Do you think USDA should have more of a leading role in
protecting against this disease?
Answer. USDA has taken an important role in preparing for and
protecting against an incursion of high pathogenicity avian influenza
(HPAI). We initiated the National Domestic H5/H7 Low Pathogenicity
Avian Influenza (LPAI) Prevention and Control program in 2004 to
conduct surveillance on the subtypes of LPAI that can mutate to
dangerous forms. We have effective trade restrictions to prevent the
introduction of HPAI through imported poultry and poultry products. Our
preparation for a possible outbreak includes development of USDA
responses as well as coordination with other Government agencies to
protect both human and animal health. Internationally, we support
capacity building, which allows APHIS to go into countries where the
disease exists and assist in control efforts by providing technical
training and advice.
Question. In what ways are you working with U.S. producers, large
and small, to make sure they have all the tools possible to protect
against this disease? What are producers asking you to do?
Answer. USDA has several cooperative programs to work with
producers. The National Poultry Improvement Plan is a cooperative
Industry-State-Federal program through which new technology can be
effectively applied to the improvement of poultry and poultry products
throughout the country. The program's provisions were developed jointly
by industry members and State and Federal officials to establish
standards for poultry breeding stock and hatchery products with respect
to freedom from certain diseases and thereby provide certification of
poultry and poultry products for interstate and international shipment.
As the avian influenza surveillance program widens, producers are
often concerned about indemnification for flocks that test positive.
Both the NPIP General Conference Committee, which represents poultry
industry stakeholders, and the States have recommended 100 percent
indemnity for participants of the NPIP H5/H7 avian influenza monitoring
program.
In addition to publishing rules and uniform standards, USDA has
focused on outreach and education through its Biosecurity for the Birds
advertising campaign, professional development training, and other
media. The advertising campaign, which provides basic information to
promote avian health through biosecurity, began in July 2004 and has
reached a circulation of over 125 million. Various training courses
have been provided to State and Federal animal health technicians,
veterinary medical officers, and other stakeholders working with the
H5/H7 LPAI live bird marketing system program. These training sessions
have included comprehensive information about poultry diseases,
laboratory testing, biosecurity, personal protective equipment, State
regulations, and risk assessments, among other things. USDA is also
expanding outreach to the commercial poultry industry, especially those
involved in the NPIP program, by updating an interactive CD to provide
new information about poultry biosecurity for feed mills, hatcheries,
slaughter plants, vaccine crews, live haulers, and service personnel.
Question. I understand that you plan to use $3 million from last
year's supplemental for avian flu vaccines and immunizations. However,
there are some concerns that vaccinations will make it difficult to
determine if flocks are actually infected with the virus after they are
vaccinated. Do you favor a vaccination program for U.S. poultry?
Answer. Vaccination does have the potential to negatively impact
our trade of poultry and poultry products, but the vaccination of
domestic poultry for H5 Avian Influenza (AI) strains can be valuable as
part of an official control and eradication program. If appropriate,
USDA is prepared to vaccinate domestic poultry, and maintains a vaccine
bank. Approximately 40 million doses of vaccine were manufactured in
2004 (H5N2, H5N9, H7N2, and H7N3) and are stored as frozen bulk viral
fluid antigens. In 2005, the bank was expanded by approximately 30
million doses. The stockpiled H5 vaccines are effective against the
current Asian strain of AI.
APHIS's Center for Veterinary Biologics (CVB) regulates the sale
and distribution of veterinary vaccines. CVB controls the distribution
of AI vaccines through a license restriction that places constraints on
when, and under what conditions, manufacturers can sell AI vaccines
domestically.
Question. Although the President's 2007 request includes a
significant increase for avian flu, this bill won't be passed until
October at the very earliest, and this disease is spreading more
quickly than many have anticipated. Do you think the funding request in
the 2007 budget is adequate to deal with avian flu or do you think you
will need additional funds this year?
Answer. Currently, APHIS has sufficient funding to carry out its
national domestic surveillance H5/H7 Low Pathogenicity Avian Influenza
program and initiate additional surveillance and preparedness
activities against an incursion of High Pathogenicity Avian Influenza.
If we were to receive the entire amount requested in the fiscal year
2007 President's Budget and the disease situation did not change from
its current status, we would not need additional funds to carry out our
stated objectives. However, if there were a widespread outbreak or
another domestic emergency related to avian influenza, we would need to
reassess our available resources and consider adjustments to our
spending plans at that time.
Question. While there has been much attention to transmission by
migratory birds, there is also evidence that a bigger threat may be
through the shipment of poultry-related products and that the disease
might even be carried by containers in which infected birds had been
kept.
Just how much do we really know about the transmission of this
disease? For example, do we know that if all U.S. poultry flocks were
kept inside buildings that they will be safe? Do you think we have
enough information to control this threat?
Answer. Poultry scientists have studied how avian influenza (AI)
and other virulent poultry diseases are transmitted. From this
research, they have developed effective procedures to help prevent
transmission from occurring. USDA has been publicizing these
biosecurity measures, and we believe that by implementing them,
producers themselves are helping us reduce the threat of widespread
disease transmission.
AI is primarily spread by direct contact between healthy birds and
infected birds, and through indirect contact with contaminated
equipment and materials. The virus is excreted through the feces of
infected birds and through secretions from the nose, mouth and eyes.
Contact with infected fecal material is the most common method of bird-
to-bird transmission.
Wild ducks often introduce low pathogenicity virus into domestic
flocks raised on range or in open flight pens through fecal
contamination. Because game birds and migratory waterfowl can introduce
disease into domestic flocks, USDA and the poultry industries recommend
preventing these avian populations from coming into contact with each
other.
Within a poultry house, transfer of the highly pathogenic avian
influenza (HPAI) virus between birds can occur via airborne secretions.
The spread of avian influenza between poultry premises almost always
follows the movement of contaminated people and equipment. AI also can
be found on the outer surfaces of egg shells. Transfer of eggs,
therefore, is a potential means of AI transmission. Airborne
transmission of virus from farm to farm is highly unlikely under usual
circumstances.
It is important to remember that a detection of H5N1 HPAI in wild
birds would not mean that commercial poultry would be affected. The
U.S. poultry industry is well equipped to prevent AI. First, chickens,
turkeys, and eggs produced for human consumption are generally raised
in very controlled environments. Secondly, biosecurity practices have
been a part of the business of raising poultry in the United States for
decades. The vast majority of our commercial poultry producers raise
their chickens and turkeys in covered structures with controlled
access.
In addition to carrying out surveillance and preparedness
activities, USDA maintains trade restrictions on the importation of
poultry and poultry products from countries currently affected by H5N1
HPAI. We would emphasize that there is no evidence that HPAI currently
exists in the United States.
Question. If we ever have an outbreak of avian flu in this country,
what kind of contingency plan do you have in place? Do you have cost
estimates, including who will pay for it and where will the money come
from?
Answer. If there were an outbreak of avian influenza (AI) in this
country, our response would depend on the nature and extent of the
outbreak and may require coordinated action with other Federal, State,
and local agencies, as well as other segments of society. ``The
National Strategy for Pandemic Influenza'' guides the national
preparedness and response to an influenza pandemic, with the intent of
(1) stopping, slowing or otherwise limiting the spread of a pandemic to
the United States; (2) limiting the domestic spread of a pandemic, and
mitigating disease, suffering and death; and (3) sustaining
infrastructure and mitigating impact to the economy and the functioning
of society. The Strategy provides a framework for future U.S.
Government planning efforts that is consistent with the National
Security Strategy and the National Strategy for Homeland Security. It
recognizes that preparing for and responding to a pandemic cannot be
viewed as a purely Federal responsibility, and that the Nation must
have a system of plans at all levels of government and in all sectors
outside of government that can be integrated to address the pandemic
threat. APHIS has developed a response plan for AI. This plan provides
greater detail on how APHIS will respond to an outbreak of AI and
define activities that will be required to address the control,
containment, and eradication of the disease. Additionally, APHIS has
developed a playbook that acts as a direct link to the National
Strategy for Pandemic Influenza, such that if the scope of an outbreak
in animals surpasses APHIS and its partner's capacity, other resources
can be activated in a standardized manner.
In the event of an HPAI outbreak that is within the scope of APHIS'
response capabilities, APHIS has the Foreign Animal Disease management
infrastructure to conduct an emergency response that would occur at the
local level, in accordance with the National Animal Health Emergency
Management System's guidelines for HPAI. Should the disease be detected
in commercial flocks or in back yard flocks, affected flocks would be
quickly quarantined to prevent spread. Sick and exposed birds would be
euthanized and the premises cleaned and disinfected to stamp out the
disease. USDA would conduct epidemiology investigations to determine
the source of the virus, and to track the movement of birds to contain
spread.
To ensure immediate deployment of supplies necessary to contain,
control, and eradicate an HPAI outbreak, APHIS is building a stockpile
of needed vaccines; diagnostic products including reagents;
disinfectants; and equipment that would be required to support
operations until normal supply lines can be established for protracted
operations. APHIS is developing models of the potential impacts of AI
outbreak in the United States and alternative control strategies. These
models will enable APHIS to test preparedness and response capabilities
through conducting simulated exercises specific to AI. The information
gathered through the simulations and the exercises will enable APHIS to
assess resource requirements in many different outbreak scenarios.
If the scope of the HPAI outbreak is beyond APHIS' and the affected
State's immediate resource capabilities, additional resources can be
obtained through the following mechanisms: the National Response Plan's
Emergency Support Function #11 ensuring that animal-health emergencies
are supported in coordination with the emergency support function that
covers public health and medical services; and the National Animal
Health Emergency Response Corps and various State response corps can be
activated. These private veterinarians and animal health technicians
are ready to assist on short notice.
Currently, APHIS has sufficient funding to carry out its national
domestic surveillance H5/H7 LPAI program and initiate additional
surveillance and preparedness activities against an incursion of HPAI.
If we were to receive the entire amount requested in the fiscal year
2007 President's Budget and the disease situation did not change from
its current status, we would not need additional funds to carry out our
stated objectives. However, if there were a widespread outbreak or
other emergency related to AI, we would need to reassess our available
resources and consider adjustments to our spending plans based on the
nature and extent of the outbreak.
USDA's current LPAI funding supports cooperative agreements with
States; diagnostic work at the National Veterinary Services
Laboratories; program personnel and their associated support costs;
vaccine stockpiling; outreach and education; training; information
technology/database architecture; and investigative and enforcement
services efforts, among other things. A certain level of indemnity
funding is available from fiscal year 2005 carry-over funding to allow
rapid response to occasional LPAI introductions into domestic poultry
flocks.
USDA's current HPAI funding supports the expansion of AI
surveillance in the commercial industry and live bird market system to
all appropriate States. In addition, the HPAI program will allow for
surveillance in upland game premises, commercial/backyard flocks, and
other high-risk populations that have not been covered under the
national domestic program. The HPAI program will support preparedness
activities such as data modeling, simulated exercises specific to AI,
and planning for the immediate deployment of the supplies necessary to
contain, control, and eradicate an AI outbreak. The program will also
expand the ``Biosecurity for the Birds'' outreach campaign, as well as
anti-smuggling and risk management activities. Internationally, the
HPAI program will support capacity building, which allows APHIS to go
into countries where the disease exists and assist in control efforts
by providing technical training and advice. This will create a more
comprehensive approach to AI by looking at it internationally,
monitoring the multiple ways that AI might get into the country, and
preparing for the possibility of a H5N1 outbreak.
FOOD SAFETY INSPECTORS
Question. Dr. Raymond, how many food safety inspectors will FSIS
employ this year? Do you have a breakdown of ``off-line'' and
``online'' inspectors? How does this compare to last year? Are
inspectors who quit or retire being replaced?
Answer. There are approximately 7,600 in-plant food safety
inspection program personnel, including field import inspectors and
compliance officers. The in-plant personnel includes 7,190 food safety
inspectors. Of the total food safety inspectors 3,171 are ``on-line''
and 4,019 are ``off-line.'' This represents a slight decline in the
number of in-plant food safety inspection program personnel due to
difficulty finding qualified personnel to fill the positions. In-plant
employees make up the overwhelming majority of the field inspection
force and are the only ones designated as ``on-line'' and ``off-line.''
Other ``front-line'' inspection employees are not identified by these
terms. Open positions are filled as quickly as possible with qualified
people. Each year, FSIS hires on average approximately 300 entry-level
Food Inspectors and approximately 75 Public Health Veterinarians.
Question. I understand that the number of plants has decreased, but
what about the number of animals processed? How do you do a good job
with fewer inspectors doing more work?
Answer. As required by the Poultry Products Inspection Act and the
Federal Meat Inspection Act, respectively, each poultry carcass and 100
percent of livestock carcasses presented for slaughter are inspected by
FSIS. Over the last decade, the number of poultry carcasses inspected
per fiscal year has significantly decreased; however, the number of
livestock inspected per fiscal year has increased.
The current number of FSIS inspection program personnel allows the
agency to perform its public health functions. FSIS inspection program
personnel provide inspection services for all establishments under its
jurisdiction by employing alternative staffing strategies and fully
utilizing available field inspection employees to address the demands
of each particular area.
HUMANE ACTIVITIES TRACKING (HAT) SYSTEM
Question. How much funding will be required to complete connection
of the HAT system to the FAIM architecture within FSIS? Please provide
detailed information.
Answer. The total amount of $7 million available from fiscal year
2005 and fiscal year 2006 will be sufficient to complete connection of
the Humane Activities Tracking (HAT) system to the Field Automation and
Information Management (FAIM) architecture within FSIS. In order to
ensure that the field work force is able to instantly transmit public
health and humane handling data to headquarters, $5.5 million of the $7
million is being used to install new high-speed connections in
approximately 1,500 of 2,300 ``base plants,'' which are establishments
from which inspection program personnel, including patrol inspectors,
operate on a daily basis. Reflected in these costs are equipment,
initiating services, and monthly charges for 1 year after the service
is initiated. The agency hopes to have high-speed connections completed
on these 1,500 base plants by February 2007, and is evaluating
alternatives for the remaining 800 sites for which DSL/Cable Broadband
is currently unavailable or have other connectivity issues. By
replacing dial-up connections with high-speed access at all base
plants, FSIS will be equipped with a fully-integrated, real-time
communications infrastructure that gives the agency the ability to
instantly detect and respond to abnormalities or weaknesses in the
system to best monitor humane handling and slaughter enforcement,
safeguard public health, and ensure food safety and food defense.
The agency will also continue its development of a reporting tool
which will link the HAT system to other agency databases through a web-
based system, for which the remaining $1.5 million is earmarked. As
part of the agency's communications infrastructure, this reporting tool
will allow inspection program personnel in the District Offices and
headquarters to access HAT data along with other food safety
verification data, thereby providing the agency with a powerful
management control tool for improved and consistent enforcement of the
Humane Methods of Slaughter Act (HMSA).
Question. How much funding is required to maintain this technology?
Answer. Ongoing charges for the 1,500 broadband locations are
expected to be $3 million of base funding annually. USDA is currently
evaluating connectivity alternatives for the remaining 800 base plant
sites, so funding estimates are unavailable at this time.
COOPERATIVE SERVICES
Question. You commissioned an outside review of the programs and
services provided by Cooperative Services at the Rural Business-
Cooperative Services agency.
Can you discuss the results of the review?
In addition, what steps will USDA take to ensure the unique
structural and economic advantages of member-owned and controlled
cooperatives will continue to be supported by USDA and its programs?
To support cooperatives, what steps have you taken to fill
positions in the field at Co-op Services that are for cooperative
development?
Answer. The Administration contracted for an outside program review
of Cooperative Programs. The review was conducted by a committee
comprised of industry leaders and members of academia and was charged
with identifying improvements or changes that would assist today's
rural cooperatives and promote opportunities for leveraging the current
Cooperative Programs' programs and capacity to support a broader range
of cooperative strategies and approaches to building economic vitality
in rural areas.
The committee's recommendations focused on three primary areas--the
expansion of the Cooperative Program's mission, the need for an
infusion of new intellectual capital, and the adoption of a regional
approach for providing cooperative services in rural communities. The
committee recommended that Cooperative Program's mission be expanded to
include alternative cooperative models and organizations, as well as
non-agricultural cooperatives. The traditional cooperative model was
seen as too restrictive, and the recommendation was made to include new
generation cooperatives, LLCs, and other innovative ``self-help''
business models. The committee also found that cooperatives and other
``self-help'' organizations that focus on housing, consumer services,
health care, consumer goods, employer-ownership, small business
purchasing, and other areas could be useful and important tools for
rural economic development and improving the quality of life in rural
areas. Finally, the committee recommended a partnership between
regional Rural Development offices and rural cooperative development
centers to provide information, education, and legal and development
assistance. Rural Development is taking these recommendations under
review.
Rural Development's cooperative programs (CP) include the Value-
Added Producer Grant (VAPG), the Rural Cooperative Development Grant
(RCDG), and the Agricultural Marketing Resource Center (AgMRC) programs
that devote major parts of their programs supporting and developing
member-owned cooperatives. The RCDG program is budgeted at $4.95
million for fiscal year 2007. Rural Cooperative Development Centers are
awarded funds for the purpose of providing assistance to groups wishing
to form cooperatives, as well as for providing assistance to existing
cooperatives in rural areas. Member-owned cooperatives are encouraged
and made specifically eligible for the VAPG program. However, the VAPG
program is a competitive program that does not set aside specific
support for cooperatives or any other type of applicant. In addition,
CP provides support to member-owned and controlled cooperatives through
the Rural Development Salaries and Expenses account by researching
cooperative issues, by providing cooperative development technical
assistance, by providing cooperative education and other technical
advisory services, and by reporting on the financial health of the
agricultural cooperative sector. Rural Development is taking these
recommendations under review.
Question. Mr. Dorr, you have recently stated that Persian Gulf
countries are showing an interest in investing in U.S. ethanol plants
and you have said, ``If you don't own [these plants] as agricultural
producers, someone else will and you're going to be working for them''.
Do you think that agricultural producers and rural cooperatives
have a roll in producing renewable fuels or have they already lost out
to the large corporate interests? Have your dire warnings come too
late?
Answer. Renewable energy is, and will continue to be a big part of
America's energy solution. From 2001 through 2005 ethanol production
more than doubled from under 2 billion gallons per year to about 4
billion gallons per year. Government investment, especially in recent
years, has helped agricultural producers and rural cooperatives play a
major roll in production of renewable fuels and will continue to assist
in the growth of the renewable fuels sector. For example, from fiscal
years 2001 through 2005, USDA Rural Development invested nearly $84
million in 89 guaranteed loans and grants to assist with development of
ethanol facilities throughout rural America. Many of these facilities
are owned and operated by agricultural producers and by cooperatively
organized entities.
We sincerely hope that agricultural producers, rural cooperatives,
and rural residents will continue to be major sources of investment in
renewable fuels. We want the people and businesses in rural communities
to share in the returns to investment and the local development that is
stimulated by local business ownership. As we look at the projects
being started across the country we see that local money is still
flowing in. What we are seeing as well, however, is that the big
institutional investor, domestic and foreign, is seeing those high
returns too. We would like to see that institutional interest in
renewables serve as a tremendous way to leverage local investment.
Question. Mr. Dorr, your mission is to support Rural America and
rural interests and, I think you agree, not large multi-national or
foreign corporations.
Do you think that the budget proposal will provide adequate capital
to small producers or cooperatives to move into the renewable fuels
industry?
Answer. USDA Rural Development has several funding tools and
opportunities, including direct and guaranteed loans and grants, to
support investment by small agricultural producers and rural
cooperatives and help move these entities into the renewable fuels
industry. Most of these programs are relatively small in terms of
budget authority. Collectively, however, they provide a highly flexible
portfolio of management strategies and funding options with which to
address the unique circumstances of agricultural producers and
cooperatives we serve. The Renewable Energy/Energy Efficiency Loan and
Grant Program (Section 9006) provides financial assistance specifically
targeted to the industry. In order to ensure adequate capital for small
producers under this program, the Section 9006 final rule, published in
July of 2005, calls for the provision of priority selection points for
small agricultural producers.
Question. Do you think the mix of grants-to-loans that you propose
will be enough to make sure these groups can get a fair shake in this
growing industry?
Answer. Rural Development will continue to extend support to
agricultural producers and cooperatives for the development of
renewable fuels from the full range of our business lending and
investment programs. These funding programs, coupled with private
sector leverage, will continue to assist rural small businesses and
small agricultural producers in increasing their access to the growing
renewable energy industry. In addition, continued simplification of
application processes for small entities will encourage increased
participation from that sector. Finally, as mentioned above, we have
placed increased emphasis on supporting small agricultural producers
through the priority selection process.
Question. How do you justify the reductions you propose when the
opportunities, and the stakes, are so great?
Answer. One of USDA Rural Development's primary roles in nurturing
the renewable fuels industry will be to encourage private sector
investment to maximize the benefit of Federal funding. By leveraging
Federal dollars with private investments, we can spread resources. By
fostering partnerships with State, local, and tribal governments,
community development organizations, and for-profit and not-for-profit
companies, Rural Development can help to grow State and local renewable
energy policies that will support further investment. To ensure that
small projects are not overlooked, we will continue to emphasize the
use of grants when they are needed and to increase utilization of loan
guarantees when possible. This will continue to allow us to serve the
neediest entities while increasing loan-based financial assistance to
the target market. In fiscal year 2007, we will be looking for ways to
better target all available program resources to meet the growing
demand in the renewable fuels industry.
Question. Please provide us a breakdown, by program, for all the
funds under your mission area for fiscal year 2007 that can be used to
support renewable fuels development by farm organizations and rural
cooperatives.
Answer.
[The information follows:]
FISCAL YEAR 2007 PROPOSED FUNDING TO SUPPORT RENEWABLE FUELS DEVELOPMENT
------------------------------------------------------------------------
Fiscal year
2007 Projected
Fiscal year Funding
Loan/grant description 2007 projected Activities for
funding levels Renewable
Energy
------------------------------------------------------------------------
Business and Industry Guaranteed Loan $990,000,000 $16,000,000
(B&I)..................................
Rural Economic Development Loan......... 34,600,000 400,000
Rural Economic Development Grant........ 10,000,000 400,000
Value Added Producer Grants............. 19,280,000 2,500,000
Section 9006 Renewable Energy Grants and 7,920,000 7,920,000
Guaranteed Loans.......................
Section 9006 Renewable Energy Guaranteed 34,600,000 34,600,000
Loan...................................
Section 9008 Biomass R&D Grants......... 12,000,000 12,000,000
Electric Program Loans.................. 700,000,000 200,000,000
-------------------------------
TOTAL............................. 1,732,420,000 273,820,000
------------------------------------------------------------------------
Question. Mr. Dorr, USDA has a long history of running a well-
managed guaranteed rural homeownership program through a private-public
partnership with over 2,000 lenders. In fact, in fiscal year 2005, over
$100 million in housing loans were provided in the rural areas of my
home State. Of that amount, 32 percent benefited low and very-low
income families.
I now see you are raising the origination fee for these loans from
2 percent to 3 percent, while interest rates are rising, and I must
admit I am puzzled. An origination fee of 3 percent is extraordinarily
high for this targeted market and almost unheard of in the housing
industry. For fiscal year 2003, you stated you were lowering this fee
from 2 percent to 1.5 percent to lower the so called ``barriers'' to
achieve the President's Initiative of increasing minority
homeownership.
Why was it considered a ``barrier'' then and not now, and how do
you justify increasing what you personally identified as a ``barrier''
to an unprecedented level?
How will your increased fee with rising interest rates help you
meet or exceed the President's goal of providing increased
homeownership rates to low and very low-income families, especially
minorities?
Answer. Homeownership, particularly minority homeownership, is
still a key Administration objective. In fiscal year 2003, fees
presented a barrier to homeownership for some prospective minority
borrowers because they had to pay the fees at closing. We helped
eliminate that barrier by allowing the entire fee to be financed into
the loan by increasing the amount we can lend up to 103 percent of the
appraised value of the home.
Additionally, we have no requirements for down payment or mortgage
insurance, so even with the fees, monthly payments remain reasonable.
The higher fee would only result in a $6 increase in the average
monthly payment for most customers. We closely monitor the other fees
charged by participating lenders in our SFH guarantee program to ensure
that fees charged are reasonable.
Raising the guarantee fee saves approximately $35 million in Budget
Authority for fiscal year 2007. This is a significant savings.
Realizing savings like this while at the same time maintaining
effective programs like 502 guaranteed loans is the balance USDA Rural
Development is trying to achieve.
THE USDA LOAN PROGRAM
Question. Also as part of your request, you are asking lenders to
certify they would not make a loan to a borrower using any other
Federal housing program, including FHA, before making a USDA loan. The
USDA program serves a rural based, lower-income population and is
limited to a primary home, unlike FHA.
What data do you have that shows these programs overlap?
Wouldn't this requirement add another layer or layers of
bureaucracy and most likely confuse participating lenders and drive up
the originator's costs that will be passed on the borrower?
What have you heard from the lending community on both of these
proposals, because, to be honest, we have heard a great deal from
lenders, underwriters and national lending associations from around the
country all of which were very critical of these efforts?
Answer. The Office of Management and Budget's (OMB's) Program
Assessment Rating Tool (PART) indicates that the 502 guaranteed program
may overlap other Federal housing programs, and may at times serve
customers that could have received loans through the Federal Housing
Authority or Veterans Administration. This general provision has been
proposed to preclude the potential overlap of Federal programs.
Currently, a lender must certify that they would not provide the
proposed loan without a Rural Development guarantee. The proposed
provision would require a lender certify that a borrower was not
eligible for another Federal insured or guaranteed housing program. If
the lending institution normally does not offer another Federal
program, they would not be bound by this proposal.
The reaction from the lending community on the fee increase and the
new certification proposal has not been positive. Higher fees and
additional paperwork are not popular concepts. However, given the cost
savings that would be realized from the fee increase and the
elimination of potential Federal program overlaps, it is felt that
benefits from these proposals are significant, can be successfully
implemented, and make good program management sense.
STRENGTHENING AMERICA'S COMMUNITIES INITIATIVE
Question. In its fiscal year 2007 Budget, the Administration again
proposes to eliminate four programs within the Department of
Agriculture and consolidate those activities in the Department of
Commerce with thirteen other programs from four other departments under
the ``Strengthening America's Communities Initiative.'' The four USDA
programs are Rural Business Enterprise Grants, Rural Business
Opportunity Grants, Economic Impact Grants, and Rural Empowerment
Zones/Enterprise Communities, which annually have provided over $72
million to Rural America's most underserved communities for several
years.
What assurances can you provide that rural communities will
continue to receive the same level of support for these specific
programs under this consolidation?
Answer. The President's Strengthening America's Communities
Initiative will include eligibility criteria that will ensure funds are
directed to those communities most in need of development assistance.
We feel confident that rural communities will fare well when these
criteria are used. USDA Rural Development has offered our expertise,
assistance, and experience in program delivery in rural areas through
our 800 local offices and 6,800 employees. We will continue to work
with the Department of Commerce and the Department of Housing and Urban
Development on the technical details of program delivery, particularly
as it affects rural areas.
Question. What studies indicate that this initiative will more
effectively deliver these specific programs?
Answer. The initiative is designed to streamline a number of
programs that provide regional economic assistance to communities, and
will include eligibility criteria that will ensure funds are directed
to those communities most in need of development assistance. While
Rural Development has not conducted any studies of the initiative, we
are confident that rural communities will fare well when these criteria
are used. USDA Rural Development has offered our expertise, assistance,
and experience in program delivery in rural areas.
Question. If any of these four programs will experience any funding
reduction under this consolidation, please indicate the amount of the
reduction and provide detailed justification for each reduction.
Answer. A total of $327 million is proposed for the economic
development component of the restructured Initiative. Further
distributions of funding by program area have yet to be determined.
Again, we believe rural America will be well served as the eligibility
criteria will direct resources to those rural communities most in need
of assistance, and USDA Rural Development expects to be heavily engaged
in program development, implementation, and delivery.
SECTION 515
Question. The budget eliminates the section 515 rural rental
housing program. Since 1963, the Agriculture Department has made loans
for affordable rental housing in rural areas. The section 515 program
is the only Federal program providing direct, subsidized loans (1
percent) to finance rural rental housing. According to a recent USDA
report, there is a substantial need to repair and renovate section 515
housing. The portfolio contains 450,000 rented apartments in section
515 developments. The average 515 tenant income is little more than
$9,000, which is equal to only 30 percent of the Nation's rural median
household income. Sixty percent of the tenants are elderly or disabled
and one-quarter are minority. The existing Section 515 portfolio is
aging. Of the 17,000 developments across the country, close to 10,000
are more than 20 years old. To maintain this stock, it will take a
commitment of Federal funds for restoration. It's hard to argue that
rural America does have a housing crisis. According to the 2000 Census,
there are 106 million housing units in the United States. Of that, 23
million, or 23 percent, are located in non-metro areas. Many non-metro
households lack the income for affordable housing. The 2000 Census
reveals that 7.8 million of the non-metro population is poor, 5.5
million, or one-quarter of the non-metro population, face cost
overburden, and 1.6 million of non-metro housing units are either
moderately or severely substandard.
Why has the Administration proposed to end a program that for over
40 years has financed over 500,000 units of affordable housing with
very few delinquencies or defaults and why is RHS giving up on
providing affordable rental housing for over seniors and families?
Answer. Rural Development has not given up on providing affordable
rental housing. The President's fiscal year 2007 budget proposes $74
million to continue the new vision for Multi-Family Housing programs.
The Administration proposes to create a new source of funding to
rehabilitate 515 properties. The Comprehensive Property Assessment
(CPA) found that 90 percent of the properties lacked sufficient cash
and reserves to prevent economic obsolescence.
Already, over 100 properties are lost from the program each year.
This number will rise quickly in coming years as deferred maintenance
overtakes the 17,000 remaining properties in the portfolio. This is a
much bigger threat to the portfolio than prepayment. Furthermore, in a
few years loans will begin maturing; unless 515 property owners have
equity in their property, many may be lost to the private market.
The Administration's multi-family housing proposal allows property
owners to restructure their loans. With this restructuring USDA will
exchange debt service payments on the loan to provide cash for
rehabilitation, and the property owner will sign up for another 20
years providing affordable housing.
The new restructuring tools that are key components in our proposed
revitalization legislation will allow us to assure that resources are
available to revitalize the vast majority of properties in our
portfolio where the owner elects to stay in the program. These
restructuring tools, primarily the use of debt deferral, will create
the opportunity to add additional debt to take care of immediate
rehabilitation needs.
One way to look at this restructuring process is to view it as a
``fix-up vs. build'' decision: it costs $85,000 on average to build a
new affordable housing unit, but only $20,000 per unit to rehabilitate
what we currently have. The vision, then, is to secure the valuable
national asset of a large affordable rural rental housing portfolio,
for the longest period, at the lowest cost to the government, at the
greatest benefit to tenants, owners, and communities.
The Administration's fiscal year 2007 Budget proposes more new
construction for multi-family housing. It does this by doubling funds
for Section 538 guaranteed loans, thereby increasing dramatically the
loan amounts available. The section 538 program works in partnership
with other financing entities to create affordable housing. More than
80 percent of the closed loans in the portfolio have 9 percent tax
credit dollars. Many tenants in section 538 properties have section 8
vouchers which assist the tenants in keeping section 538 housing
affordable. The program also offers interest credit subsidies that
assist in lowering the interest rate throughout the term of the loan.
The subsidized interest rate keeps rents low for tenants.
Question. According to the Department's Comprehensive Property
Assessment, repair and renovation of the section 515 portfolio is a far
greater problem--in terms of number of units--than prepayment. The
Comprehensive Property Assessment indicated the need for some 50,000
vouchers for families unlikely to be displaced by sale of certain
section 515 development and estimated over $2 billion was needed to
repair and restore the existing portfolio. Rural Housing Service (RHS)
has used section 515 to finance this sort of repair and renovation
activity. In fiscal year 2006, RHS will commit at least $50 million to
repair and restore the existing portfolio.
How many 515 projects have been repaired using the 538 program and
how many projects would you predict would be rehabilitated with the 538
program at the President's budget request?
What statutory barriers exist for the 538 program to refinance and/
or repair a 515 project with HUD or USDA rental assistance attached to
it?
Answer. This is the first year of using 538 financing to renovate
existing 515 properties. Currently, we estimate that in fiscal year
2006, 10 properties in the 515 portfolio will receive lender provided
funds with a 538 guarantee. At the fiscal year 2007 President's budget
request amount of $198 million, we expect to finance approximately 20
to 30 existing 515 properties.
There are no statutory barriers which would preclude section 538
financing on an existing 515 project. However, section 515 owners do
not have to refinance their loans in order to finance repairs or to
restore their developments. If a section 515 owner wants to finance
repairs with a 538 loan guarantee, the section 538 program provides an
interest credit down to the applicable Federal rate at the time the
loan closes (currently approximately 4.6 percent). The interest rate
difference is only part of the story. The cost of making section 538
funds available is significantly less to the Federal Government than
through the Section 515 program. We would also consider the section 538
guaranteed funds to be only one of many sources of funding for
rehabilitation purposes that can be made available to existing 515
projects.
VOUCHERS
Question. The fiscal year 2007 budget proposes $74 million for
vouchers and indicated that some of this money will be used for
portfolio restructuring.
What is the planned breakout between expenditures for restructuring
and vouchers--in both dollars and units?
Answer. The 2007 Budget addresses the displaced tenant issue with
the funding of vouchers and hopes to be able to address the
dilapidation issue if the restructuring authorization is passed. The
2007 Budget includes $74 million to continue the multi-family housing
revitalization proposal that was initially proposed in the 2006 Budget.
This funding will be used primarily for housing vouchers, good for 12
months, for residents of projects whose sponsors prepay their
outstanding indebtedness on USDA loans and leave the program. The
specific dollar amount and number of tenants is dependent on the number
of properties that pre-pay, their location, and the market conditions
at the time. In addition, the Administration is proposing that 2007
appropriation language provide the flexibility to use the $74 million
for debt restructuring and other revitalization incentives that we
expect to be authorized before or during 2007.
Question. The fiscal year 2006 budget requested $214 billion for
vouchers alone. The fiscal year 2007 budget requests much less for
vouchers--$74 million--and proposes to use some of that for
restructuring.
What has changed in the last year so that the administration can
request only about one-third of the fiscal year 2006 budget for
vouchers?
Answer. The Comprehensive Property Assessment (CPA) found that 10
percent of the properties (approximately 1,700) could be economically
viable to prepay if permitted. This is estimated to be about 46,000
units, with approximately one-third of the prepayments occurring in
each of the first three years. The fiscal year 2006 budget reflected
vouchers needed in the first year funded under the assumption they
would last 3 to 4 years and provided administrative funds to establish
the Office of Portfolio Revitalization. The fiscal year 2007 budget
reflects vouchers needed in the first year funded at a 1-year level.
RENTAL ASSISTANCE
Question. The budget proposes to reduce the term on rural rental
assistance contracts from 4 years to 2 years.
If this is not approved, what is the total needed to continue all
expiring contracts? If this is approved, what is the projected total
needed for contract renewals for fiscal year 2008?
Answer.
[The information follows:]
RENTAL ASSISTANCE PROJECTIONS
------------------------------------------------------------------------
4 YR RENEWALS
-------------------------------
YEAR Dollars in
Number Thousands
------------------------------------------------------------------------
2006.................................... 66,799 $639,126
2007.................................... 85,756 987,000
2008.................................... 78,567 1,284,564
2009.................................... 60,524 1,204,900
2010.................................... 73,531 950,000
------------------------------------------------------------------------
RENTAL ASSISTANCE PROJECTIONS
------------------------------------------------------------------------
2 YR RENEWALS
-------------------------------
YEAR Dollars in
Number Thousands
------------------------------------------------------------------------
2007.................................... 66,799 $477,000
2008.................................... 85,756 628,000
2009.................................... 145,366 1,089,000
2010.................................... 146,280 1,121,000
2011.................................... 152,098 1,194,000
------------------------------------------------------------------------
Question. The Administration proposes to continue new construction
for farm labor housing. These units need rental assistance in order to
be affordable to eligible farmworkers housing households.
Is there rental assistance for farmworker housing included in the
budget request?
Answer. Yes, Rural Development's rental assistance request includes
units for farm labor housing.
WATER AND SEWER GRANTS
Question. The budget includes a reduction in the interest rate
charged to poverty level communities, which is offset by a reduction in
water/sewer grants. For most rural communities, grant funds are the key
to financing new systems and system improvements. These communities
have the most significant problems with their water-sewer systems and
lack the capacity in terms of income and population to spread the costs
for improvements. It is likely that a reduction in the amount of
available grant assistance will limit the ability of the communities
with the greatest need to afford RUS assistance. The RUS system allows
for up to 75 percent grant financing for water or sewer systems, yet
typically communities only get 35-40 percent grant.
What assurance can you give the Committee that this proposal will
not result in small poor communities being left out of the program or
increasing the debt servicing that will have a negative impact on
increased average user water and sewer bills?
Did you conduct analysis on small low-income rural communities and
can you share this information with the Committee?
Answer. An applicant's debt repayment capacity is evaluated
independently of the loan interest rate and based on maintaining
reasonable user fees. The applicant's loan capacity is then determined
based on its repayment capacity and the interest rates and terms
available at the time the project is approved. With the proposed
reduction in interest rates, it expects to increase most applicants'
loan capacity. Grant funds will continue to be used to assist borrowers
in maintaining reasonable user rates where their borrowing capacity is
less than the project cost. Priority for funding will continue to be
based on small communities with low income levels that must make system
improvement to meet health standards.
The chart below describes our analysis of the revised interest rate
structure in funding a loan and grant project with the same level of
budget authority. Using data available at the time the President's
budget was being developed, the chart shows the market rate range where
the revised interest rate structure will result in lower annual loan
payments. Since the historic market rate falls within that range, we
concluded our revised interest rate structure would better serve our
borrowers in maintaining reasonable user fees. Rural Development has
determined that because this assists all communities, it will help the
small low-income rural communities as much or more than those between
5,000 to 10,000 populations.
[The information follows:]
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
ORGANIC RESEARCH
Question. The 2002 Farm Bill established the Organic Research and
Extension Initiative to fund organic agricultural research at the level
of $3 million for each of the subsequent 5 years. When combined with
the Organic Transitions Program, this joint Integrated Organic Program
has been disbursing about $4.5 million to fund organic research
annually.
How does the competitiveness of this program compare to other of
the integrated grant programs (e.g. section 406 grants)?
Answer. In 2005, the Integrated Organic Program received 82
proposals requesting $39 million and the competitive review panel
deemed 42 of the proposals requesting $23 million as high quality and
fundable. To stay within the approximately $4.7 million available to
the program, 8 proposals were recommended for funding, which represents
10 percent of all submitted and 19 percent of those that were
determined to be fundable.
In 2005, the Crops at Risk Program received 22 proposals requesting
$7.4 million and the competitive review panel deemed 9 of the proposals
requesting $3.4 million as high quality and fundable. To stay within
the $1.3 million available to the program, 5 proposals were recommended
for funding, which represents 23 percent of those that were determined
to be fundable.
In 2005, the FQPA Risk Avoidance & Mitigation Program received 18
proposals requesting $25.6 million and the competitive review panel
deemed 12 of the proposals requesting $17.6 million as high quality and
fundable. To stay within the $4.2 million available to the program, 4
proposals were recommended for funding, which represents 22 percent of
those that were determined to be fundable.
In 2005, the Methyl Bromide Transitions Program received 19
proposals requesting $6 million and the competitive review panel deemed
11 of the proposals requesting $3.9 million as high quality and
fundable. To stay within the $2.9 million available to the program, 9
proposals were recommended for funding, which represents 47 percent of
those that were determined to be fundable.
Question. Please describe any plans CSREES has to increase its
level of support for organic agricultural research.
Answer. The quality of proposals being funded through the
Integrated Organic Program and low percentage of high quality proposals
funded suggest that increased funding for the Integrated Organic
Program would be effectively used. In the 2007 President's budget, the
program is funded under the NRI. The agency is assessing how organic
research is currently supported through allied programs and how this
support could be increased, if appropriate. For example, a number of
National Research Initiative programs support basic and applied
research directly and indirectly related to organic production,
marketing and environmental interdependencies. It may be possible to
increase support for organic agricultural research by increasing staff
awareness of organic research needs and by adapting Requests for
Applications to reflect the increasing interest of the USDA in organic
production and marketing systems, as well as potential implications to
the environment, rural communities and long term competitiveness in the
United States products.
ORGANIC AGRICULTURE
Question. The 2002 agricultural census contained only 2 questions
on organic operations, providing little information about the scope of
the industry. What is NASS's plan to gather more information to
document demographic and economic trends in the organic sector?
Answer. NASS has expanded the Organic Section for the 2007 Census
of Agriculture. NASS staff consulted with other USDA agencies and
organic grower organizations to develop a more comprehensive Organic
Section that will better address the needs of the data user community.
This data will allow NASS to publish the organic data in conjunction
with the economic and demographic data already collected on the census.
The result will be a more complete picture of the organic sector of
American agriculture.
Question. We understand that NASS has suggested they could better
address data on the organic industry by doing a follow up survey to the
2007 census sent only to certified organic operations. Is it possible
to include this organic survey as an addendum (included with) the main
agricultural census?
Answer. The 2007 Census of Agriculture will collect information on
certified, transitional, and non-certified organic agriculture. In
combination with other data collected in the census of agriculture,
NASS will be able to produce cross tabulations providing the most
comprehensive data set available on the organic sector.
The main barrier to inserting an addendum into the 2007 Census of
Agriculture is the inability to easily pre-identify the producers in
all sectors of organic agriculture. Industry experts have indicated
information is needed on certified, transitional, and non-certified
organic producers. While it may be possible to pre-identify certified
producers, it would be virtually impossible to pre-identify the others.
Question. Of 15 project areas in the NRI competitive grants
program, I have been informed that only 2 of them have funded projects
that contain an organic agriculture element within them. These are
Managed Ecosystems and Agricultural Prosperity for Small and Medium-
Sized Farms. However, I have also been informed that since 2003, there
have been no grants made that specifically fund organic production
research, though five projects that had some aspect pertaining to
organic marketing were funded through the Agricultural Prosperity
program in 2005. How could organic be better represented through more
program areas of the NRI?
Answer. Organic research, extension, and educational issues are
applicable to the majority of the NRI competitive grants programs. In
the past, the majority of projects funded have been through the Managed
Ecosystem program and its predecessor, the Agricultural Systems
program. Between the fiscal years 2003 and 2006, six projects have been
funded through the Managed Ecosystem program for an award amount of
$1,976,127. Three of these projects are related to increasing
production in cropping systems through more efficient cycling of
nutrients and better understanding of soil biological processes. Two
projects compared apple production systems between organic,
conventional, and integrated systems. Results from the apple projects
were published in an article in Science.
As you mentioned, the new Agricultural Prosperity for Small &
Medium-Sized Farms program funded two projects on organic agriculture
during its first year. One project was from a social perspective
looking at the role of women farmers in sustaining small farms and
rural communities. The second project was on production systems
transitioning to conservation tillage practices. The 2006 fiscal year
projects have not been announced, but we anticipate additional projects
related to organic agriculture will be funded.
In addition to the Managed Ecosystem and the Small Farms program,
six other programs have been involved in funding organic agriculture
projects between fiscal years 2001 and 2006. These programs illustrate
the diversity of topics that can support organic research interests
through NRI programs. Programs that have funded projects directly
related to organic agriculture are the Biology of Plant-Microbe
Associations, Soil Processes, Biologically Based Pest Management,
Biology of Plant-Microbe Associations, Agricultural Markets and Trade,
and Rural Development. Research questions being addressed under these
programs range from ``Population Migrations of Phytophthora Infestans
in Organic and Conventional Agricultural Production Systems'' related
to potato blight in the Biology of Plant-Microbe Associations program,
``Microbial Community Structure in Relation to Organic and
Conventionally Farmed Desert Soils'' related to soil health in the Soil
Processes program, ``Dispersal of Phytophthora capsici in Soils from
Conventional and Organic Agroecosytems'' looking at how organic
practices can control disease in the Biologically Based Pest Management
program, ``Population Migrations of Phytophthora Infestans in Organic
and Conventional Agricultural Production Systems'' in the Biology of
Plant-Microbe Associations program. Social and economic issues can be
addressed through the Agricultural Markets and Trade and Rural
Development programs. Examples of funded topic are ``Experimental
Investigation of Interactions in Willingness to Pay for Certified
Organic and Non-Genetically Modified Foods'', ``The Demand for
Alternative Foods: Perceptions and Characteristics of U.S. Shoppers'',
and ``Generational Transfer of Alternative Farms as Rural Development
in the Northern Great Plains Region''.
Projects can impact or inform organic producers, but may not be
directly identified as an organic research project. These projects
provide examples of the breath of issues that are facing the organic
producer, which can be addressed through NRI programs. There were 16
NRI programs that funded projects that are potentially relevant to
organic research in fiscal years 2004 and 2005. The areas of research
vary from use and management of manures, growth and health of animals,
weed dynamics, soil biological processes and nutrient cycles, air
quality from animal systems, bio-control of insects, biodiversity of
systems, to health aspects encouraging vegetable consumption. NRI
funding for these projects was at a level of $16,691,097.
An emerging area of interest for the organic producer is in being
able to use generally accepted practices of conservation, enhancing
biodiversity, soil enrichment, and recycling on inputs to increase the
economic value of organic production practices. Several programs in the
NRI are expanding our focus on ecosystem services and market valuation
of these practices. For example the Markets and Trade and Managed
Ecosystem programs have funded 10 projects that will lead to adoptions
of conservation practices or evaluate market potentials for ecosystem
services. This is a new opportunity for research, extension, and
educational activities in support of organic agriculture.
______
Questions Submitted by Senator Tom Harkin
RISK MANAGEMENT AGENCY
Question. In your written testimony, you referred to the
President's request to fund 15 additional staff years for the Risk
Management Agency to provide better oversight of the crop insurance
program so as to avoid problems such as those that resulted in the
failure of the American-Agrisurance insurance company in 2002. Please
describe in greater detail what functions those additional staff would
perform that would have such an impact?
Answer. RMA has requested the additional staff for the Compliance
offices to provide more effective program oversight, strengthen the
front-end reviews of approved insurance providers, and to address
outstanding OIG recommendations to improve company oversight and
internal controls.
Increased staffing will assist Compliance with ongoing efforts
pertaining to quality control and assurance requirements and the
increased workload associated with increases in program size and
complexity. These efforts will clearly improve RMA's ability to deter
waste, fraud, and abuse through better internal controls and
monitoring. The ability of the Compliance staff to maximize automation
and other efficiencies to offset limited personnel resources has
reached a peak, and it is necessary to increase actual numbers of
people at this time or alternately reduce some activities. Reducing any
of our ongoing activity would be a hard choice since every activity
Compliance engages in is based on statutory or approved program
requirements. Compliance uses various methodologies to limit the number
of policies selected for review (dollar thresholds, etc.) and refers
complaints and other related issues back to the Approved Insurance
Providers for their review and response. However, accomplishing more of
this work with RMA Compliance staff would provide greater assurance and
control over the results.
The addition of two staff to each of the six Regional Compliance
Offices is intended to assist with the additional workloads associated
with performing random policy reviews associated with determining a
program error rate under the Improper Payments and Information Act of
2002 (IPIA). During the last decade, Compliance greatly reduced the
numbers of random policy reviews it performed. Requirements in the
previous Standard Reinsurance Agreement for the companies to randomly
review policies annually, provided mixed and/or wholly unusable results
that RMA deemed unsatisfactory, especially for establishing the
required Program Error Rate. Presently, Compliance has taken resources
away from other review activities to supplement the required IPIA
random reviews. The additional staff will permit each office to recover
some of the effort in these other areas.
Question. For fiscal 2007, the President is seeking $109 million to
fund computer upgrades at various agencies in the Department of
Agriculture, a recurring request for the last several years. Why is
Risk Management Agency the only entity within USDA for which the
President is proposing to assess private sector partners the cost of
upgrading the Agency's computers, by imposing a half cent fee on every
policy sold by crop insurance companies?
Answer. The Federal-Private sector partnership that makes up the
Federal crop insurance program is unique among USDA programs. The
delivery of the Federal crop insurance program is provided through a
network of private sector insurance companies who are reimbursed by the
Federal Government for their delivery costs. The companies are also
able to earn underwriting gains in years of favorable loss experience.
For the 2005 crop year, the total compensation paid to participating
insurance companies is expected to approach $1.8 billion and more than
$10 billion over the last decade.
While private sector companies deliver the crop insurance program,
the USDA Risk Management Agency (RMA) information technology (IT)
system is critical to its ongoing operation. The RMA IT system is used
to maintain a wide array of vital program information including acreage
and production information on about 1.2 million policies, and provides
critical internal controls for mitigating program vulnerabilities. The
RMA IT system also maintains actuarial data for over 368 crops in over
3,000 counties Nation-wide. The private sector insurance companies need
to access the RMA IT system and data on a daily basis in order to
conduct business. The existing RMA IT system has been in place for over
a decade and is reaching the end of its life expectancy. The system is
becoming increasingly difficult and expensive to maintain and recent
years have seen increases in computer downtime which threaten the
operation and security of the Federal crop insurance program.
The Administration's proposal recognizes the urgency of RMA IT
funding needs in light of previous budget requests that have gone
unfunded. The Administration believes the private insurance companies
are a primary beneficiary of efficient, effective and more advanced
computer systems, and thus it is not unreasonable to have the companies
contribute to the modernization and maintenance of the IT systems which
they rely upon to accrue considerable financial benefits. In addition,
the new IT systems will likely contribute to improved and more
efficient compliance with Congressional mandates pertaining to data
mining and data reconciliation/data sharing, which has a direct impact
and associated cost to the insurance companies.
MARKET ACCESS PROGRAM
Question. Why does the President's budget propose to reduce funding
for the Market Access Program (MAP) by 50 percent?
Answer. The proposal to limit funding for MAP in 2007 reflects the
Administration's efforts to reduce the Federal deficit. It should be
noted that even if the program is limited to $100 million in 2007, that
level is still higher than the $90 million program level that was
authorized for MAP prior to the 2002 Farm Bill. Reducing the deficit is
a key component of the President's economic plan and will help to
strengthen the economy and create more jobs. Farmers, ranchers, and
other residents of rural America understand the importance of a healthy
economy, which raises incomes and increases demand for their products.
This and other deficit reduction measures will contribute to a more
prosperous future for our citizens.
Question. Has some problem been detected with the program, or has
it been determined that it is no longer necessary to assist U.S.
agricultural exporters?
Answer. Expanding overseas markets for agricultural products is
critical to the long-term health and prosperity of the U.S. farm
community. This Administration is convinced that, given our advantages
in agricultural productivity and low cost of production vis-a-vis the
rest of the world, the future of our farmers and ranchers lies in the
export market. FAS' international activities, including MAP, play a
critical role in helping open new markets, pursuing the emerging growth
markets of tomorrow, and maximizing the opportunities offered by trade
liberalization and growth in global food demand. FAS' market
development programs were reviewed in accordance with the Office of
Management and Budget's Program Assessment Rating Tool in 2005 and
received a score of 75 with a ``Moderately Effective'' rating.
The current budget situation requires hard choices and the setting
of priorities. We believe that $100 million is an appropriate level for
the program in light of the fiscal discipline that is absolutely
necessary in times of deficit spending. It is also important to
understand that, while funding for MAP is reduced, funding for all
other USDA market development activities, including the Foreign Market
Development Program, remains unchanged from this year's level.
WORLD TRADE ORGANIZATION
Question. In the Doha Round negotiations, the European Union has
pushed hard to require that all international food aid be provided only
on a cash basis, rather than through commodity donations as is done in
U.S. programs. I find the EU proposal on food aid to be unacceptable,
as do most other members of the Senate. Where do the negotiations stand
on this issue?
Answer. Recently, the Agriculture Negotiations Chair, Crawford
Falconer, issued a Food Aid Reference Paper, which essentially
summarized the state of play on various food aid issues. The purpose of
the paper is to help focus discussions on key issues in upcoming
meetings. We are encouraged by the Chair's paper as it allows for in-
kind, or commodity, food aid. Earlier this year, the African and Least
Developed Countries (LDC) groups, which are the recipients of food aid,
issued a joint submission on food aid. This paper, too, suggested that
food aid disciplines should leave the door open for in-kind donations.
These are encouraging developments in the food aid negotiations.
AGRICULTURAL TRADE
Question. Many of the bilateral disputes that have emerged in
recent years in agricultural trade are highly technical in nature,
typically having to do with unscientific sanitary or phytosanitary
(SPS) rules or cumbersome customs or distribution requirements. What
steps is USDA taking to make sure that potentially problematic rules of
this kind are identified early and addressed before they hinder access
for U.S. agricultural exports?
Answer. On a weekly basis FAS and U.S. food safety agencies meet to
review new or revised foreign SPS regulations and assess their
potential impact on U.S. exports. In 2005, USDA's World Trade
Organization (WTO) Enquiry Point led a U.S. interagency process that
reviewed over 600 foreign SPS regulations notified to the WTO. Based on
an interagency analysis, the Enquiry Point drafted and submitted
official comments on 62 foreign measures to reduce their impact on U.S.
exports. In addition to the numbers above, FAS and U.S. food safety
agencies also collaborated to prepare an additional dozen formal
comments addressing barriers to market access for measures that were
not notified to the WTO, including a number of measures implemented by
China and India. FAS' overseas staff also actively monitor local
government's SPS-related regulations and notify the U.S. industry and
the Enquiry Point of potentially problematic regulations for further
action.
FAS uses the rules of the WTO SPS Agreement to exert pressure on
countries such as India and China to increase the transparency of their
import regulations, thereby, allowing the United States and other
countries to expose and then resolve unfair SPS import barriers. In
2005, these actions caused China to change import regulations on meat,
wines, spirits, and fresh fruits. U.S. exports to China of these
products grew from $142 million in fiscal year 2004 to $252 million in
fiscal year 2005. Similarly, India relaxed import requirements that
could have blocked U.S. exports of almonds, pulses (chick peas,
lentils, and peas), and other horticultural exports. Almond shipments,
the top U.S. agricultural export to India, increased from $95 million
in fiscal year 2004 to $118 million in fiscal year 2005. U.S. exports
of pulses to India increased from $500,000 in fiscal year 2004 to over
$3 million in fiscal year 2005.
FARM LOAN PROGRAMS
Question. I have heard from constituents that the emergency loan
program is unnecessarily complex and, for many farmers, too restrictive
to meet their legitimate needs. I note that FSA is continuing its
project to streamline all farm loan program regulations, handbooks, and
information collections. I believe that it is essential to complete
this project and reduce the paperwork burden for all loan applicants
and FSA employees as quickly as possible. How soon can borrowers expect
improved loan processing procedures?
Answer. FSA has re-engineered and streamlined the guaranteed and
emergency (EM) loan processes, and is in the process of streamlining
the remaining direct loan making regulations and processes. These
streamlined regulations will reduce the paperwork required for a loan
and shorten the time it takes to process a loan. The final rule
implementing these regulations is currently in the clearance process,
and we expect the regulations to be implemented in the field in early
2007. In the case of EM loans, the submission requirements have been
reduced and flexibility added to the process. However, the Agency still
must determine an applicant's eligibility for an EM loan, make
decisions regarding loan feasibility and adequacy of collateral for the
proposed loan, and comply with Federal environmental and credit policy
requirements. We have endeavored to make this as easy as possible for
the applicant, but these determinations require information that some
applicants may find burdensome to provide.
FSA also utilizes technology to ease the application process.
Applicants can access all forms necessary to apply for a loan via the
internet. They may also complete and submit loan applications on-line.
The Agency recently implemented a state-of-the-art business planning
system that has improved loan processing response times.
Question. What more can FSA do to make emergency loans available to
those who have suffered crop, livestock or property damage as a result
of natural disasters?
Answer. FSA re-engineered the EM loan regulations and procedures in
2002. The changes made it easier for producers, particularly livestock
producers, to apply for and receive EM loans. Any livestock loss,
whether it is reduced production or loss of animals, is now considered
a qualifying loss for EM loans. If a producer meets the statutory
eligibility requirements and has suffered any property damage, they now
may qualify. Additional changes were made to the method used for
calculating a qualifying loss for crop producers. These changes have
streamlined the application process and made EM loans more accessible
to crop producers. FSA also uses available crop insurance data to
expedite and reduce the burden on applicants. The new regulations allow
FSA to provide EM assistance to more producers in an efficient and
expeditious manner and comply with statutory requirements.
Question. I am going to read from the USDA Budget Summary: ``The
farm credit programs provide an important safety net for America's
farmers by providing a source of credit when they are temporarily
unable to obtain credit from commercial sources.''
I fully agree with this statement, but would expand it to include
the guaranteed loan programs which facilitate loans from private
lenders, so I am particularly concerned that the Administration intends
to shift $30 million of the cost of the guaranteed credit to the very
farmers who are least able to afford the additional cost.
The Administration proposal refers to a modest increase in the fee
required to obtain guaranteed loans. In fact, upfront fees for all
guaranteed loans will be increased 50 percent. In addition, a proposed
annual fee for multi-year farm operating loans will significantly
increase the cost of credit for those farmers who obtain guaranteed
unsubsidized credit lines. For some farmers the annual fee may make the
difference between the ability to cash flow and the decision to quit
farming. What makes this proposal even more distressing is that
interest rates are rising, so farmers will face higher credit costs
even before the fees are imposed.
What legal authority are you relying on to impose these fees?
Answer. The Consolidated Farm and Rural Development Act, 307(b)
[7 U.S.C. 1927], authorizes fees on farm ownership loans. The fees are
not statutorily limited but are ``as the Secretary may require.'' In
the case of operating loans, Title V of the Independent Offices
Appropriations Act of 1952 [31 U.S.C. 9701] authorizes fees for
services or things of value provided by the Government. The statute
requires that the fees or charges be based upon what is fair and on the
costs to the Government.
Question. The budget assumes a decrease of $186,000,000 for
guaranteed farm ownership loans and a decrease of $112,890,000 for
guaranteed farm operating unsubsidized loans. The justification for
these significant decreases is a decline in demand for the program.
To what extent do the proposed user fees contribute to the decline
in program demand?
Answer. We do not anticipate that imposition of fees will have a
material impact on the program demand. Historically, program demand has
reacted to trends in the agricultural and general economies. Guaranteed
operating loan demand has actually increased to date in fiscal year
2006 as higher energy prices, which were unforeseen during the
development of the budget, have increased production costs. The demand
for guaranteed farm ownership loans has declined slightly, as
refinancing activity has slowed with rising interest rates.
Question. How many borrowers are expected to forgo guaranteed loans
because of the additional and new fees?
Answer. We anticipate that very few borrowers will be forced to
forgo guaranteed loans because of the additional and new fees. The
amount of the fees is relatively minor as compared to the total
expenses and overall borrowing of a typical borrower; therefore, very
few borrowers are likely to be unable to cash flow because of the
increased fees.
Question. Has FSA conducted an economic assessment of the proposed
fees on borrowers and rural lenders? If so, what are the key findings
of the assessment?
Answer. FSA did not conduct a formal economic assessment of the
proposed fees. However, FSA reviewed the impacts of fee increases in
the Small Business Administration and USDA Rural Development programs.
Fee increases on guaranteed loans from those agencies have not
materially impacted the use of the programs.
Question. Are there adequate funds available to offer subsidized
guaranteed loans or direct loans to borrowers who will be unable to
cash flow guaranteed loans because of the additional fees?
Answer. We anticipate that there will be adequate funds to meet the
needs of the few borrowers likely to be in that situation. Because the
amount of the fees is small compared to the total expenses and overall
borrowing of most guaranteed loan applicants, we anticipate that few
will need to move to subsidized or direct loans as a result of the
fees.
SECTION 9006 OF THE 2002 FARM BILL
Question. As you know, section 9006 of the farm bill's energy
title, which I authored, provides grants and loans to farmers and rural
small businesses for renewable energy projects and to make energy
efficiency improvements. The program is very popular, and already well
oversubscribed. Of course, I strongly disagree with the
Administration's budget proposal to cut this program's funding by more
than half. In 2004 less than 3 percent of applications for small wind
and solar projects were approved and funded. What I have heard is that
the scoring system USDA and DOE have established puts smaller scale
distributed generation projected at a significant disadvantage to
larger projects.
Why are so few small-scale renewable energy projects and such a
negligible percentage of such applications for grants receiving funds?
Are you looking into ways to alter the program to give small-scale
renewable energy projects a greater opportunity to participate?
Would you supply data as to how much projects have been funded the
past several years, by energy category, and by the size or scale of
those projects?
Answer. The Section 9006 regulation published on July 18, 2006,
included a simplified and streamlined application process for small
projects of $200,000 or less. To increase accessibility for smaller
projects and applicants, we expanded priority points for small
agricultural producers and small rural businesses. We are in the
process of developing application worksheets to help guide smaller
applicants through the process and provide them with tools to help
improve the quality of applications. In fiscal year 2007, we are
looking for ways to better target the resources to give small scale
projects a greater opportunity to participate.
SECTION 9006 AWARDS, FISCAL YEAR 2003-2005
----------------------------------------------------------------------------------------------------------------
Small Projects \1\ Large Projects \2\
---------------------------------------------------------------
Award ($) Number Award ($) Number
----------------------------------------------------------------------------------------------------------------
Grants:
Anaerobic Digester.......................... .............. .............. 21,973,493 82
Bioenergy................................... 233,521 10 7,547,719 27
Energy Efficiency........................... 2,068,455 132 2,861,488 33
Geothermal.................................. 130,848 3 249,435 1
Hybrid...................................... 26,457 2 2,413,375 7
Hydrogen.................................... .............. .............. .............. ..............
Solar....................................... 229,883 12 1,212,360 5
Wind........................................ 434,712 24 27,374,804 97
---------------------------------------------------------------
Grant Totals.............................. 3,123,876 183 63,632,674 252
===============================================================
Guaranteed Loans:
Bioenergy................................... 100,000 1 10,000,000 1
---------------------------------------------------------------
Loan Totals............................... 100,000 1 10,000,000 1
===============================================================
Total Number.................................... 437
Total Awards ($)................................ 76,856,550
----------------------------------------------------------------------------------------------------------------
\1\ Small Projects=projects with total eligible project cost of $200K or less.
\2\ Large Projects=projects with total eligible project cost greater than $200K.
Value-added Producer Grant (VAPG) applications, especially those
seeking funds for planning purposes, do not necessarily indicate size
or scale of the proposed project. Therefore, an accurate measure of the
number applicants proposing small-scale energy projects is not
available.
Beginning in 2006, VAPG evaluation criteria provide for priority
points to be awarded to farm-based renewable energy project
applications.
Following is a breakdown of VAPG-funded energy projects by number
of projects, amount funded, and category for 2001-2005.
VAPG-FUNDED ENERGY PROJECTS
--------------------------------------------------------------------------------------------------------------------------------------------------------
Fiscal year 2001 Fiscal year 2002 Fiscal year 2003 Fiscal year 2004 Fiscal year 2005
Project ---------------------------------------------------------------------------------------------------------
No. Amount No. Amount No. Amount No. Amount No. Amount
--------------------------------------------------------------------------------------------------------------------------------------------------------
Ethanol....................................... 9 $3,461,704 22 $4,824,323 11 $1,849,620 6 $988,986 14 $1,519,500
Biodiesel..................................... 2 1,000,000 4 1,246,000 9 1,783,225 4 621,099 9 789,377
Solid fuel.................................... 1 470,000 4 272,567 1 50,000 ..... ........... 1 110,000
Anaerobic..................................... ..... ........... 1 65,429 ..... ........... 2 135,000 3 188,975
Wind.......................................... ..... ........... 2 298,000 2 14,812 1 128,000 ........... ...........
Solar......................................... ..... ........... ..... ........... ..... ........... 1 73,332
Other......................................... ..... ........... 1 250,000 1 101,920 ..... 3 358,435 ...........
---------------------------------------------------------------------------------------------------------
Total................................... 12 4,931,704 34 6,956,319 24 3,799,577 14 1,946,417 30 2,966,287
--------------------------------------------------------------------------------------------------------------------------------------------------------
SECTION 9002 BIOBASED PRODUCTS
Question. As you know I talked with the Secretary about the
biobased products rule coming out a few weeks ago. We had a good
conversation. I want to thank you as I did the Secretary for getting to
this point. Specifically how many items do you expect to designate for
preferred procurement by the end of this calendar year?
Answer. We currently have six items designated by final rule for
preferred procurement. These six items account for at least 120
specific products from 58 different manufacturers. We expect to have
four additional proposed rules, with ten items each, in the clearance
process or published in the Federal Register by the end of calendar
2006. When finalized, the first five rules will account for over 1,000
specific products from more than 300 manufacturers within the 46 items.
USDA will continue to designate additional items as further market
research and test data is obtained.
RURAL DEVELOPMENT GRANTS
Question. Please provide a list of Rural Development grants
(including the amount granted) made in fiscal year 2004 and fiscal year
2005 to communities on the list published in the Federal Register on
January 4, 2001 (66 Fed. Reg. 751) for the purpose of building rural
businesses infrastructures to utilize and market products from forest
hazardous fuel reduction projects.
Answer. Our research indicates that no Rural Development grants
were made to organizations in the communities listed for the purpose of
building rural business infrastructure to utilize and market products
from forest hazardous fuel reduction projects.
IMPLEMENTATION OF TEXAS INTEGRATED ELIGIBILITY CONTRACT
Question. Under Secretary Bost, as you know, I have had some
concerns about turning over core Food Stamp Program functions to
private contractors, specifically the recent decision by the State of
Texas to turn over large areas of program administration to private
entities.
As you know, at the end of January, Texas began to roll out the
first stage of its integrated eligibility contract in two counties
surrounding the Austin area on a pilot basis. I have had a chance to
review several of the site and implementation reports from this
contract phase and based upon my review, I have several reasons for
considerable concern.
The Weekly Post transition Status Report from the Texas Access
alliance for the reporting period of 3/6/06 through 3/12/06 shows that
individuals seeking assistance over the telephone are encountering
major problems. This report indicates call abandonment rates of almost
55 percent and average waiting time of over 21 minutes. Given that
these are average waiting times, it is obvious that many individuals
are waiting longer to speak with customer service representatives.
Under Secretary Bost, what is being done to ameliorate these
problems and, more importantly, please indicate what levels of
telephone service you believe are acceptable. You have assured me
several times, and I take you at your word, that FNS will not approve
the rollout of additional project phases unless you are satisfied with
the contractor performance in the previous contract phase. Under what
conditions would you not approve the next contract phase? Is a 20
minute waiting time with more than half of callers giving up
acceptable? What are the criteria and standards that you will use to
make a decision regarding approval of the next phase of the contract?
Answer. Implementation of Texas' new system is intended to allow
the State to realize the customer service improvements and potential
savings that its new business model offers. USDA/FNS stewardship
responsibilities require assurance that basic program standards are
maintained. Our overriding issues for continuing project expansion are
sustaining program access and integrity to ensure that applicants and
recipients get fair, timely, and accurate service.
We recognize that any new system is likely to encounter problems
during implementation, many of which can be addressed as rollout
continues. Our concern is that the project not expand in the face of
major problems which jeopardize access or integrity, or which warrant
immediate correction. We intend to continue funding and working with
the State to resolve problems and will only halt funding in the face of
serious deficiencies.
Texas' recent call center performance has not been acceptable, but
it has been improving. The data from the weekly status report for the
week ending April 9, 2006, indicates that the call abandonment rate is
3.86 percent and the call wait time is 66 seconds. The data from the
week ending March 12, 2006--approximately 1 month earlier--had a call
abandonment rate of 54.5 percent and the call wait time was 1,276
seconds. Therefore, based on our monitoring of this project, we know
that steps are being taken which have already resulted in improved call
center operations.
USDA/FNS has developed a list of performance elements which we
consider critical and appropriate for use in considering the success of
initial rollouts of the Texas project. While we will be monitoring many
aspects of project implementation, we will focus on these components
which include: System Functionality, Customer Service, and Application
Timeliness. Findings from our recent reviews found: long call wait
times, high call abandonment rates, and call operators providing
misinformation; as well as backlogs in data entry, and a high
percentage of cases returned to the vendor due to missing or inaccurate
information. We also learned that there is insufficient system testing
and risk assessment. While these items may not in and of themselves be
critical, taken together their cumulative effect caused us to question
the readiness of the system to expand.
The decisions on the pace of rollout are complex and dynamic and
must include assessment of the risks of identified problems and the
availability of remedies to these problems. These must be weighed
against the cost and risks of delayed implementation. Accordingly, we
are not setting specific numerical standards but are reviewing and
monitoring the overall functionality and capacity of the system. Based
on its own assessment of readiness, the State announced a delay in its
rollout to resolve fundamental operating concerns. We agree with the
State's decision and continue to work closely with the State to monitor
project implementation.
Note: Under Secretary Bost and Deputy Under Secretary Kate Coler
traveled to Texas on May 16, 2006 to state clearly the FNS expectation
that further rollout should be delayed until identified issues have
been addressed. Texas stated they will not rollout the system to
additional areas in the State until issues of access and integrity have
been resolved. No date for future rollout has been established at this
time.
IMPACT OF TEXAS ELIGIBILITY SYSTEM ON VULNERABLE GROUPS
Question. As you know from our prior correspondence on this matter,
I have been particularly concerned about the disparate impact of the
new eligibility systems for persons with low levels of literacy,
persons with limited English proficiency, the elderly, and persons with
disabilities.
In my previous correspondence with you, I have raised these issues
several times. In a recent letter to me you responded that, ``we are
working to monitor the project's impact on such persons and ensure the
State's continued compliance with applicable civil rights laws.'' Are
you tracking the extent to which the new eligibility process and
systems impact these vulnerable groups compared to other individuals?
Please tell me specifically how you are monitoring these things. Can
you provide me with any data about differential impacts of the new
system on these vulnerable groups? Are you collecting any data on this
at all?
Answer. Access to program benefits for all eligible persons is a
priority of USDA/FNS, however vulnerable populations such as the
elderly, disabled, and others with barriers to participation are of
specific concern. For this reason, USDA/FNS is carefully watching for
negative impacts on especially vulnerable populations. In addition, the
USDA/FNS Program Access Review process includes contacting advocacy
organizations, which represent the interests of a variety of vulnerable
populations, to obtain their feedback on the service they have received
during the food stamp application process.
USDA/FNS is conducting on-site monitoring of local offices and call
centers, participating in project meetings and conference calls, and
performing an ongoing review of performance reports and contractor
deliverables.
USDA/FNS is monitoring Texas' project implementation in affected
counties on a monthly basis. However, given the normal State reporting
mechanisms, which include time needed for review of the data, the
number of cases processed at the State level during the first month of
project implementation in January 2006 will not be available until June
2006. County level data is normally reported only for the months of
January and July; thus county data for January will be available in
June/July.
FNS does not impose higher standards on Texas than exist for other
States administering the Food Stamp Program, such as reporting or
collecting data not normally collected as a part of routine program
operations. However, we are monitoring these issues closely, in lieu of
actual additional data collection. Thus far, it could be concluded that
Texas' new business model actually has the potential to improve access
for special populations. We will continue to watch this aspect
carefully, as Texas proceeds with its project.
NATIONAL ANIMAL IDENTIFICATION SYSTEM
Question. USDA expedited its plans to implement a national animal
identification system after BSE was discovered in a cow in Washington
State. A system such as this is extremely important to trace back the
origin of animals in the event of a disease outbreak, but also to
determine its exact age. In a recent BSE case in Alabama, the age of
the cow has been a key issue in order to determine the effectiveness of
FDA's ruminant-to-ruminant feed ban and for restoring beef trade. South
Korea made it clear that it wanted certainty that the cow that tested
positive for BSE in Alabama was in fact born before FDA's ruminant-to-
ruminant feed ban.
Recent press accounts indicate that the national animal
identification system will only track animal movements and not the age
of animals. Is this correct?
Answer. Implementation of NAIS will support State and Federal
animal disease monitoring and surveillance through the rapid tracing of
infected and exposed animals during animal disease outbreaks. The
ultimate long-term goal of NAIS is to provide animal health officials
with the capability to identify all animals and premises that have had
direct contact with a disease of concern within 48 hours after
discovery. While age is not required to track an animal to its origin,
its value in an epidemiologic investigation can be significant and
producers are encouraged to report such information to the private and
State databases. However, it is important that the ``required'' data
elements be restricted to the most basic information needed to trace an
animal back to its premises of origin.
What is USDA's justification for only tracking animal movements and
not incorporating animal age into the system?
Answer. Producers are very much aware of the value of having
records to document the age of their animals and may elect to input
such data in private tracking data systems. While age is not required
to track an animal to its origin, its value in an epidemiologic
investigation can be significant and producers are encouraged to report
such information to the private and State databases. However, it is
important that the ``required'' data elements be restricted to the most
basic information needed to trace an animal back to its premises of
origin. USDA wants this system to be as easy as possible to allow for
producer participation. Increasing the amount of information producers
must submit could discourage the number of participants.
Why does USDA not want to know the age of animals for tracking
purposes when it would provide critical information for restoring or
maintaining beef trade?
Answer. The ultimate long-term goal of NAIS is to provide animal
health officials with the capability to identify all animals and
premises that have had direct contact with a disease of concern within
48 hours after discovery. While age is not required to track an animal
to its origin, its value in an epidemiologic investigation can be
significant and producers are encouraged to report such information to
the private and State databases. However, it is important that the
``required'' data elements be restricted to the most basic information
needed to trace an animal back to its premises of origin. USDA wants
this system to be as easy as possible to allow for producer
participation. Increasing the amount of information producers must
submit could discourage the number of participants. Again, market
demands will drive the reporting of additional information and will be
better accepted by the affected producers.
Question. On January 10, of this year, a non-profit U.S. Animal
Identification Organization (USAIO) was formed, at the behest of USDA,
to implement and operate the animal movement database. USAIO submitted
a Memorandum of Understand (MOU) to USDA to develop a strategic
partnership.
Has USDA approved the MOU?
Answer. USDA has received a proposed memorandum of understanding
from USAIO. USDA since published the document detailing our plan for
the integration of private animal tracking databases with the National
Animal Identification System (NAIS). This plan includes a draft
cooperative agreement that, when finalized, will be used to establish
the arrangement of all participating organizations. USDA plans to have
all agreements signed in June 2006.
Will USDA exercise authority to approve or disapprove decisions
made by the USAIO regarding the management and operation of the
national animal tracking database.
Answer. Animal tracking databases will be managed and owned by the
industry and States. As envisioned and outlined in our strategic
documents, the NAIS will integrate with more than one of these private
animal tracking databases. On April 6, 2006, USDA released the general
technical standards that animal tracking databases will need to comply
with to enable their integration with the NAIS. Private database owners
or those involved with the development of private databases, such as
USAIO, have been invited to submit applications for system evaluation
to USDA and offer feedback as the final technical requirements are
established.
Should USDA find that the defined data elements are compliant with
the NAIS standards, the technology architecture meets the technical
requirements, and the proposed databases submitted for review meet all
the other criteria, we would initiate a formal agreement with each
entity responsible for compliant databases. The agreement would also
detail access rights, as well as safeguards for preserving historic
data if the organization discontinues operation of the database or
ceases business. If and when the agreement is finalized, those
databases would be noted as an authorized or compliant animal tracking
system in the NAIS. The application for system evaluation and a draft
cooperative agreement are available on the NAIS Web site at
www.usda.gov/nais.
By early 2007, USDA expects to have the technology in place, called
the ``Animal Trace Processing System'' or commonly known as the
``metadata system,'' that will allow State and Federal animal health
officials to query the NAIS and private databases during a disease
investigation. The animal tracking databases will record and store
animal movement tracking information for livestock that State and
Federal animal health officials will query for animals of interest in a
disease investigation.
If there is a disease outbreak, and there is an inability of USAIO
to provide the necessary tracking information to USDA due to poor
management decisions or technology flaws, who will be held accountable?
Answer. USDA has released the general technical standards that
animal tracking databases will need to comply with to enable their
integration with the NAIS. Private database owners or those involved
with the development of private databases, such as USAIO, have been
invited to submit applications for system evaluation to USDA and offer
feedback as the final technical requirements are established.
Should USDA find that the defined data elements are compliant with
the NAIS standards, the technology architecture meets the technical
requirements, and the proposed databases submitted for review meet all
the other criteria, we would initiate a formal agreement with each
entity responsible for compliant databases. The agreement would also
detail access rights, performance measures such as availability of the
system, and requirements for redundancy and back-ups to ensure data is
available on an as-needed basis. Also, safeguards for preserving
historic data if the organization discontinues operation of the
database or ceases business will be part of the agreement. If and when
the agreement is finalized, those databases would be noted as an
authorized or compliant animal tracking system in the NAIS. If USDA is
unable to access necessary data from a compliant entity during a
disease investigation, USDA may either revoke their status as a
compliant entity (therefore affecting the system's marketability to
producers) or take some other corrective action.
Question. In June 2004, I wrote Secretary Veneman expressing
concern that the implementation and infrastructure of the planned
national animal identification system appeared to be geared towards
cattle to the exclusion of other animal species. Currently, the USDAIO
is made up of only cattle or bison representatives and the database
appears to not be suited for poultry or hogs.
What is USDA doing to remedy this problem to ensure that the
database is least burdensome to producers and tailored to the daily
functioning for operations of all animal species?
Answer. Throughout the establishment and implementation of the
NAIS, USDA has engaged in extensive dialogue with producers and
industry organizations across the country to gauge their views on
animal identification. In April 2005, USDA published a draft strategic
plan and draft program standards for the NAIS and invited public
comments on those documents. Industry-specific working groups have also
been studying the issue of animal identification and will be making
recommendations to USDA through an established advisory committee on
how best to tailor the program to meet their industry-specific needs.
NAIS working groups have been established for both the poultry and
swine industries, and they have been providing input throughout the
developmental process.
On April 6, 2006, USDA released the general technical standards for
animal tracking databases that will enable integration of private
systems with the NAIS. Those involved in the development of private
databases, such as the U.S. Animal Identification Organization (USAIO),
were invited to submit applications for system evaluation to USDA and
offer feedback as the final technical requirements are established.
USDA plans to enter into cooperative agreements with organizations
responsible for the databases that meet the standards. The application
for system evaluation and a draft cooperative agreement are available
on the NAIS website. More than one private animal tracking database can
be integrated into the overall NAIS, including those that might be
species-specific.
By early 2007, USDA expects to have the technology in place, called
the ``Animal Trace Processing System'' or commonly known as the
``metadata system,'' that will allow State and Federal animal health
officials to query the NAIS and private databases during a disease
investigation. The animal tracking databases will record and store
animal movement tracking information for livestock that State and
Federal animal health officials will query for animals of interest in a
disease investigation.
Once the entire system is designed and implemented, the market will
determine which technologies are the most appropriate to meet the needs
of the system. Sale barns, feedlots, and others will help determine
which methods are most cost-efficient and effective. In developing the
system, USDA has been accepting input from both species-specific
working groups and a markets and processors working group.
Will USDA, in partnership with USAIO, be incorporating the
principles and practices of existing USDA disease eradication programs
into the structure and operation of the national animal identification
system?
Answer. The primary objective of the NAIS is to develop and
implement a comprehensive information system that will support ongoing
animal disease programs and enable State and Federal animal health
officials to respond rapidly and effectively to animal health
emergencies such as foreign animal disease outbreaks or emerging
domestic diseases. The faster animal health officials can respond to,
contain, and eradicate disease concerns, the sooner affected producers
can resume business as usual. USDA has been developing data standards
to align with this overall concept.
grain inspection, packers and stockyards administration (gipsa)
Question. On March 9, during a hearing of the Committee on
Agriculture, Nutrition, and Forestry to review GIPSA's enforcement of
the Packers and Stockyards Act, I asked GIPSA Administrator James Link
why there had been no governmental oversight or corrective action given
the high rate of staff turnover, management preventing employees from
doing their jobs and management demanding that staff inflate the number
of investigations listed in annual reports at GIPSA. These problems
continued over the course of 5 years. James Link stated he did not know
why USDA failed to take corrective action because he was not employed
by USDA during that time. You have served as USDA's Deputy Under
Secretary for Marketing and Regulatory programs since December 2002.
You have also served as acting Under Secretary since last year. How is
it possible that GIPSA was in complete disarray for so many years, yet
you did not take corrective action?
Answer. Prior to my appointment with USDA, I served as the Chief
Economist for the National Cattlemen's Beef Association. Due to my past
connection with the cattle industry, I was recused from issues that had
a direct connection to my previous employer for a period of 1 year.
After this recusal period ended, I continued to distance myself from
Packers and Stockyard Program issues due to a perceived conflict of
interest. However, upon Under Secretary Hawks retirement and assuming
the role of Acting Under Secretary, followed shortly by Jim Link's
appointment as GIPSA Administrator, I worked with USDA ethics experts
to assure that by inserting myself into GIPSA management that I was not
crossing ethical boundaries. At such time corrective actions were taken
to begin addressing the matters that have been outlined in the OIG's
report.
Question. During your time as Deputy Under Secretary, what was your
role in and responsibility for communicating with the Under Secretary
and Secretary concerning GIPSA's mission and daily operations relating
to enforcement of the PSA against anti-competition practices?
Answer. Prior to my appointment with USDA, I served as the Chief
Economist for the National Cattlemen's Beef Association. Due to my past
connection with the cattle industry, I was recused from issues that had
a direct connection to my previous employer for a period of 1 year.
After this recusal period ended, I continued to distance myself from
Packers and Stockyard Program issues due to a perceived conflict of
interest. However, upon Under Secretary Hawks retirement and assuming
the role of Acting Under Secretary, followed shortly by Jim Link's
appointment as GIPSA Administrator, I
worked with USDA ethics experts to assure that by inserting myself
into GIPSA management that I was not crossing ethical boundaries. At
such time corrective actions were taken to begin addressing the matters
that have been outlined in the OIG's report.
Question. What will you do to make sure that the Secretary or the
new Under Secretary knows what GIPSA is doing in regard to anti-
competitive practices?
Answer. Both the Secretary and I have an open door policy with
GIPSA. I meet weekly with the Administrator to discuss issues ongoing
within the agency. These discussions involve all types of Packer and
Stockyards cases, including financial, trade practice, and competition
issues. Also, weekly activity reports are submitted by GIPSA and
reviewed by the Secretary's and Under Secretary's office. This report
includes all important issues ongoing within GIPSA. As needed, GIPSA's
Administrator briefs my office, as well as the Secretary on
investigations that may have a large economic impact. I am committed to
maintaining open lines of communications between GIPSA and the Under
Secretary's office for Marketing and Regulatory Programs.
______
Questions Submitted by Senator Richard J. Durbin
SIMPLIFIED SUMMER FOOD PROGRAM
Question. The Simplified Summer Food Program, started as the Lugar
pilot program, was expanded to now include 25 states. In Illinois, we
know there are many children who are eligible for free or reduced price
lunch during the school year who are not participating in a summer food
program. I'm told sponsors are hard to come by because the paperwork
and accounting requirements are onerous. The nutrition and anti-hunger
community in Illinois expects to see a dramatic increase in summer food
programs when Illinois is able to participate in the Simplified Summer
Food Program. Have States participating in the Simplified Summer Food
Program seen increases of this type? Have States that participated in
this program attracted more program sponsors, operated more program
sites and served more low-income children than those States not
participating in the program?
Answer. States participating in the Simplified Summer Food Program
have shown an increase in participation as measured by sponsors, sites,
and meals served to eligible children during the summer months. During
the same time, those States not participating in the program have
experienced a decrease in each of the corresponding categories.
However, since the inception of the Simplified Summer Food Program,
many States have also had the opportunity to operate a seamless summer
feeding program through the National School Lunch Program (NSLP).
Because these two initiatives have operated concurrently in these
States, we are not able to identify the extent to which changes in
sponsors, sites, and children result from the Simplified Summer Food
Program, from the NSLP seamless summer feeding program, or from a
combination of both.
WIC FOOD PACKAGE
Question. Last year, the Institutes of Medicine released
recommendations for improving the nutritional profile of the WIC food
package, including adding whole grain foods, fresh produce and
incentives for breast feeding. Given the growing rates of overweight
and obese children, these recommendations for an updated food package
also could help start children on the right path to nutritious and
lower fat dietary habits makes. What are the USDA's plans for
incorporating IOM recommended changes to the WIC food package?
Answer. USDA is proceeding with a rule making process that will
afford opportunity for public comment on all of the proposed changes to
the WIC food packages before the rule is finalized. The proposed
revisions to the WIC food packages largely reflect the recommendations
of the Institute of Medicine (IOM) in its 2005 Report WIC Food
Packages: Time for a Change. The proposed rule was sent to the Office
of Management and Budget this spring. We are hopeful that a proposed
rule can be published by summer 2006. However, affording opportunity
for a full 90-day public comment period for this important rule may
preclude issuing an interim final rule within the 18-month statutory
deadline.
CSFP CASELOAD
Question. Low-income Illinois seniors rely heavily on the Commodity
Supplemental Food Program to supplement what they are able to purchase
at the grocery store or obtain through a food bank. I recognize the
program is under stress as commodity prices have grown faster than
program funding. What plans does the agency have to ensure that current
caseload demand can be met?
Answer. All available resources are being utilized to support the
program, but total estimated resources are insufficient to support 2006
nationwide caseload at the 2005 level.
In addition to cash resources, CSFP commodity inventory maintained
at Federal, State, and local levels and those commodities obtained
under agriculture support programs (surplus commodities) that are
appropriate for inclusion in the CSFP food package are being used to
support the program. The types and amounts of surplus commodities
depend on agricultural market conditions.
On December 29, 2005, we assigned tentative caseload and
administrative grants for 2006 based on the level of resources expected
to be available to support the program. While all available resources
were included in our calculations, total estimated resources available
were sufficient to support about 477,000 tentative caseload slots,
representing a reduction of approximately 11 percent from the 2005
caseload level. Final caseload and administrative grants were allocated
on March 27, 2006. The final caseload level increased to over 492,000
slots due to an expected increase in the level of surplus commodities
available for use in the CSFP food package and lower caseload use by
Louisiana early in the year due to the disruption caused by the recent
hurricanes. Both of these factors served to free available cash
resources to support more caseload slots nationwide without negatively
impacting Louisiana. However, CSFP States were subject to at least a 6
percent reduction in final caseload from 2005 levels, and consistent
with the regulations, States that did not fully utilize caseload in the
previous year were subject to further reductions.
FINANCIAL ASSISTANCE PROGRAMS ALLOCATION FORMULAS
Question. NRCS administers a host of conservation programs--the
Environmental Quality Incentives Program (EQIP), Conservation Security
Program (CSP), and others. In my view, the State of Illinois is well-
equipped to take advantage of these environmental programs--producers
in the State have a long-standing tradition of being at the forefront
of conservation, the State is one of the leading producers of
agricultural products, and there is a lot of land used for farming--28
million acres or 80 percent of the State's total land. Unfortunately,
when compared to States with similar populations or farm sectors or
agricultural production statistics, Illinois receives lower
conservation technical assistance allotments. These are the multiplier
funds that help farmers build expertise and leverage other funding
sources. One of my concerns is that there are more than two dozen
measures that can be weighted differently to determine State technical
assistance allocations. My other concern is that the formulae and
criteria that are used to make State allocations are not available on
the NRCS website. I would like to know why the State of Illinois
received this allocation and I would like to know what NRCS is doing to
make these allocation decisions more transparent. Will NRCS publish
theses criteria on its website?
Answer. EQIP allocations to States include financial assistance
(FA) and technical assistance (TA) dollars. FA is allocated to the
States and territories based on 31 base and natural resource factors
which are relevant to addressing the EQIP national priorities. The
source of the data is generally the Natural Resources Inventory (NRI)
data, although some data is based on Environmental Protection Agency
(EPA), Ag Census, Bureau of Indian Affairs (BIA), National
Oceanographic and Atmospheric Agency (NOAA) and the American Plant Food
Control Officials reports. Program Management Performance Incentives,
initiated in EQIP in fiscal year 2003, include FA and TA and are part
of a State's allocation only if a high level of performance was
achieved in administering the prior years funding.
TA funding is used to deliver program-specific services. Technical
assistance allocations are based on the NRCS cost-of-programs data and
linked directly to a State's FA allocation. There are no weights in TA
allocations. For fiscal year 2006, NRCS took into consideration the
amount of TA that would be required to service EQIP contracts written
in prior years. Nationally, with the prior year workload pulled into
the equation, the total workload--represented by FA dollars equaled
$1,947,931,838 (prior year $1,094,395,709 plus fiscal year 2006
$662,601,964). EQIP TA was set at $190,934,165 and equals about 9.8
percent of the FA workload. Therefore, each State, including Illinois,
received a TA allocation equal to 9.8 percent of the total FA
workload--as represented by the prior year and current year FA dollars.
In fiscal year 2005, Illinois received an additional $313,958 EQIP
TA allocation to accelerate the writing of Comprehensive Nutrient
Management Plans through the use of Technical Service Providers. That
same year, the State returned $1.4 million in EQIP FA without the
commensurate amount of TA. Fortunately, other States were able to use
the FA.
The FA and Performance Incentive formulas are as follows:
FA FORMULA
------------------------------------------------------------------------
Weight
(percent)
------------------------------------------------------------------------
The base factors (49.3 percent):
Acres of non-irrigated cropland (1997 NRI).......... 3.2
Acres of irrigated cropland (1997 NRI).............. 4.3
Acres of Federal grazing lands (1992 NRI)........... 0.5
Acres of non-Federal grazing lands (1997 NRI)....... 4.2
Acres of forestlands (1997 NRI)..................... 1.1
Acres of specialty crops (1997 NRI)................. 3.2
Acres of wetlands and at-risk species habitat (1997 4.5
NRI)...............................................
Acres of water bodies (1997 NRI).................... 3.2
Livestock animal units (1992 NRI)................... 5.7
Animal waster generation (1992 NRI)................. 5.7
Waste management capital cost (1992 NRI)............ 3.4
Acres American Indian Tribal Lands (most current BIA 3.3
acres).............................................
Number of Limited Resource Producers (1997 Ag 4.9
Census)............................................
Grazing land lost to conversion (1997 NRI).......... 0.8
Revised Air Quality non-attainment areas (EPA)...... 1.3
The resource factors (49.3 percent):
Acres of pastureland needing treatment (1992 NRI)... 5.4
Acres of cropland eroding above T (1992 NRI)........ 6.1
Acres of Fair and Poor Rangeland (1992 NRI)......... 6.1
Acres of Forestlands, eroding above T (1992 NRI).... 1.4
Acres of cropland and pastureland soils affected by 2.6
saline and/or sodic conditions (1997 NRI)..........
Miles of impaired rivers and streams (EPA).......... 3.5
Potential for pesticide and nitrogen leaching (1997 1.3
NRCS Report).......................................
Potential for pesticide and nitrogen runoff (1997 1.7
NRCS Report).......................................
Ratio of livestock animal units to cropland (1997 1.7
NRCS Report & NRI).................................
Number of CAFO/AFO (1997 Ag Census)................. 2.7
Ratio of commercial fertilizers to cropland (1995 0.8
American Plant Food Control Officials Report)......
Wind erosion above T (1997 NRI)..................... 4.2
Phosphorous runoff potential (1997 NRCS Report)..... 3.9
Riparian areas (1997 NRCS Report)................... 0.8
Carbon sequestration (1992 & 1997 NRCS Reports)..... 3.5
Coastal zone (1992 NOAA Report)..................... 3.6
------------------------------------------------------------------------
Note: Financial Assistance allocations to entities (Alaska, Hawaii,
Pacific Basin, and Puerto Rico) without reliable base and resource
factors account for 1.4 percent of total FA.
Total of FA factors (100 percent).
Program Management Performance Incentives:
For fiscal year 2006, $38.4 million Program Management Performance
Incentives are part of the allocation if a State performed above the
cut-off. The following factors were used to compare State performance:
------------------------------------------------------------------------
Weight
Performance Factors (percent)
------------------------------------------------------------------------
Cost share obligations versus payments for fiscal year 15
2004 and fiscal year 2005..............................
FA to TA ratio.......................................... 25
TSP obligations and disbursements....................... 15
Weighted cost-share percentage.......................... 10
Limited Resource Farmers................................ 10
Livestock-related contracts (CNMP)...................... 15
Program National Priorities............................. 10
---------------
Total of Performance factors...................... 100
------------------------------------------------------------------------
In fiscal year 2006, NRCS will release a request for proposals to
evaluate all of the allocation formulas in their entirety. This project
will be a comprehensive evaluation of each program allocation formula,
to include analysis and findings on each formula's consistency with the
new NRCS Strategic Plan; consistency with program statutory authorities
and regulatory requirements, and program goals and objectives;
technical and analytical defensibility of the formula (parameter and
variable selection, formula functional form) and data sources; the
efficiency and effectiveness of allocation outcomes as a result of
formula. The deliverable will be used to provide guidance for
improvement in allocation formulas, as evidence to support NRCS's
allocation formulas to interested external parties, to provide a
template for which to evaluate future allocation formulas, and finally
as a means to assess how allocation formulas relate to programmatic
efficiency and annual/long-term performance measures.
When the evaluation is complete, NRCS will post this information on
the website. NRCS is committed to making our processes transparent
through our public website.
MARKET ACCESS PROGRAM
Question. The Administration's fiscal year 2007 budget cuts the
Market Access Program (MAP) program in half from $200 million to $100
million. Overseas markets are critical for our agricultural producers,
and this program was an important part of making our products
competitive overseas. The State of Illinois alone exports $4 billion
annually in agricultural products.
I would like a report on the markets that MAP has helped open up,
the commodities the program has assisted since the MAP received
funding, and the rate of return on the Map's activities. I would also
like to know what alternative programs the Administration hopes will
fill the place of MAP as our producers compete against foreign
producers supported by export subsidies.
Answer. We are providing a table which identifies more than 40
markets where MAP funds were used to help open the market for some 35
U.S. agricultural, fish, and forestry products. We are also providing a
listing of all the current participants in the MAP.
With regard to the rate of return on MAP activities, the Foreign
Agricultural Service (FAS) has hired an independent evaluator to assess
the effectiveness of two primary market development programs
administered by FAS--the MAP and the Foreign Market Development
(Cooperator) Program. This work is ongoing, and FAS hopes to receive
the results in late summer of 2006. This evaluation will also be used
to satisfy the Office of Management and Budget's requirement outlined
in the Program Assessment Rating Tool to conduct independent
evaluations of government programs.
As for supporting U.S. producers in the export market, the U.S.
Government is actively pursuing reform of international trade rules in
the World Trade Organization (WTO) so that U.S. exporters will not have
to compete with foreign producers who receive export subsidies. In
fact, agreement was reached at the Hong Kong Ministerial meeting in
December 2005 that all forms of export subsidies should be eliminated
by 2013. FAS currently administers four other foreign market
development programs that augment the MAP: the Foreign Market
Development (Cooperator) Program funded at $34.5 million in fiscal year
2006, the Emerging Markets Program at $10 million, the Technical
Assistance for Specialty Crops Program at $2 million, and the Quality
Samples Program at $2.5 million.
Question. In its January 2006 report, the Office of the Inspector
General stated that because of the voluntary nature of the enhanced
surveillance program and based on USDA published data that estimated
the ``distribution of the cattle population, as well as those that died
or became nonabulatory,'' it could not determine whether USDA achieved
the desired representation. How does USDA know that it is testing a
representative sample and that it is testing animals that are at
highest risk such as older, clinically normal cattle? Why hasn't USDA
released detailed results of the surveillance program, such as age
distribution, geographic locations of the sample, and whether the cows
were down, neurologic or clinically normal?
Answer. Experience in Europe (where there has been significant
Bovine Spongiform Encephalopathy (BSE) exposure and circulating
infectivity in contrast to the United States, where we can assume very
limited, if any exposure) has shown that testing a targeted population
of cattle--those animals exhibiting some type of clinical abnormality--
is the method most likely to identify BSE in the national herd. As an
example, from 2001 to 2004, a total of 4,798,764 targeted animals were
sampled, with a total of 5,486--or approximately 0.11 percent--of the
targeted animals testing positive for BSE. In contrast, during that
same time frame, a total of 34,207,597 clinically normal animals were
sampled, with a total of 982--or approximately 0.003 percent of the
clinically normal animals testing positive. These differences clearly
demonstrate the efficiencies of sampling subpopulations where the
disease is most likely to be detected if it is present. Therefore,
since our surveillance efforts began, USDA has consistently focused on
sampling these targeted cattle subpopulations. The targeted population
includes cattle that have classic clinical signs of BSE, are
nonambulatory, exhibit signs of a central nervous system disorder, or
cattle that die for unexplained reasons.
With regard to the geographic distribution of the sample obtained
in our enhanced surveillance effort, we are still analyzing this
information and will present this to the public when our analysis is
complete. USDA's surveillance plan looks at this issue on a national
level. It is most important that our sample is obtained from among the
animals in our target populations. European reports have shown clearly
that this disease is most likely to be found in downed, dying, dead,
and diseased animals, so we go to the facilities where these animals
are found, regardless of where the animals originate. We have largely
worked with animal disposal facilities. In regions where those don't
exist, we have made efforts to conduct other types of collection and
are confident that we have obtained a sufficient sample that represents
the target populations--those animals where we are most likely to
detect the disease--within the United States.
CONCLUSION OF HEARINGS
Senator Bennett. The subcommittee is recessed.
[Whereupon, at 11:20 a.m., Thursday, March 30, the hearings
were concluded, and the subcommittee was recessed, to reconvene
subject to the call of the Chair.]
AGRICULTURE, RURAL DEVELOPMENT, AND RELATED AGENCIES APPROPRIATIONS FOR
FISCAL YEAR 2007
----------
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
NONDEPARTMENTAL WITNESSES
[The following testimonies were received by the
Subcommittee on Agriculture, Rural Development, and Related
Agencies for inclusion in the record. The submitted materials
relate to the fiscal year 2007 budget request for programs
within the subcommittee's jurisdiction.]
Prepared Statement of the American Farm Bureau Federation
The Farm Security and Rural Investment Act of 2002 (FSRIA) was
enacted 4 years ago following 2 years of exhaustive debate in the House
and Senate. The new farm law represents a delicate balance by
effectively addressing the stability of our agricultural production
base, protecting our important natural resources and enhancing
nutrition and food assistance programs in our Nation.
The mandatory programs administered by the Department of
Agriculture such as commodity, conservation, crop insurance, export
promotion programs, nutrition and forestry are of enormous importance
to farmers, ranchers, rural businesses, low-income Americans and our
Nation's children. Therefore, we respectfully ask the Appropriations
Committee to avoid making any changes to mandatory programs within the
USDA budget.
Contract-based working lands conservation programs such as the
Environmental Quality Incentives Program (EQIP), Conservation Security
Program (CSP), Wildlife Habitat Incentives Program (WHIP) and Forest
Land Enhancement Program (FLEP) are a priority within the agricultural
and landowner community, as shown by current levels of
oversubscription. Farm Bureau is concerned that many of these programs
have not been funded at optimum levels, especially the Conservation
Security Program. This has led to a level of confusion among farmers
and ranchers of when and how the program will be implemented within
their particular watershed, and whether or not the financial incentives
will be adequate to encourage participation. As we move forward in this
budget process, Farm Bureau encourages Congress to find an appropriate
balance of funding for targeted land idling programs, such as the
General and Continuous Conservation Reserve Programs, with our current
working lands conservation programs.
Farm Bureau supports the farm bill's energy title that includes
provisions for Federal procurement of bio-based products, bio-refinery
development grants, a biodiesel fuel education program, renewable
energy development program, renewable energy systems, a bioenergy
program, biomass research and development and value-added agricultural
product development and marketing. These programs play a critical role
in assisting in rural economic development as well as in increasing our
Nation's energy independence and should be fully funded at authorized
levels.
Farm Bureau has identified three areas as priorities for
discretionary funding in fiscal year 2006. They are funding for animal
identification implementation, programs that maintain the use of
agriculture inputs and programs that increase agriculture exports.
PROGRAMS NECESSARY FOR IMPLEMENTATION OF ANIMAL IDENTIFICATION
The threat of bioterrorism and the discovery of bovine spongiform
encephalopathy (BSE) in the United States has prompted increased action
by USDA and others to step up animal disease surveillance and funding
for critical programs such as animal identification. Farm Bureau places
great priority on efforts to safeguard our livestock and food supply
and requests increased resources be appropriated to the National Animal
Identification System (NAIS) for these activities.
We have serious concerns about the adequacy of the administration's
proposal for $33 million for the Animal and Plant Health Inspection
Service (APHIS) to continue implementation of the NAIS. Industry
estimates of the U.S. Animal Identification Plan (USAIP), upon which
the NAIS is based, forecast an ongoing cost of about $100 million per
year to effectively implement such a system. USDA has expended just $84
million total in the first 2 years of development of the NAIS. When
added to this year's budget request, the total Federal fund commitment
amounts to approximately $117 million. This is significantly short of
the department's own cost estimate of $550 million for the first 5
years of NAIS operation.
If the government were to fund $33 million each year (the same as
their budget requests during the first 3 years of operation), two-
thirds of the cost of the NAIS would have to be funded by producers and
affected industries in order for the NAIS to proceed on the timeline
originally proposed by both USDA and the livestock industry. Farmers
and ranchers cannot afford to bear the brunt of the cost of this
program, which is essentially a public good. Although participating in
the NAIS does provide some insurance to producers in the event of an
animal health incident, this program also assists Federal animal health
officials and is an important tool against the effects of accidental or
intentional introduction of zoonotic disease. Given the benefits of the
NAIS to the general public and our overall national biosecurity, a
larger portion of the cost must be borne by the government.
If the industry bears the cost of identification devices and
application of those devices, and the Federal Government were to fund
the majority of the cost of database maintenance, program
administration, and retro-fitting for data collection at large co-
mingling sites (i.e., markets and processing facilities), the end
result would be an almost equal funding distribution between industry
and government. However, the current budget request will not support
this funding split under the timeline proposed in USDA's NAIS Draft
Strategic Plan. Under the fiscal year 2007 budget proposal, States and
industry would have to bear a greater share of the cost burden in order
to maintain the timeline through full implementation in 2009, although
States and industry cannot afford to pay for the majority of the
system, the United States cannot afford to delay implementation of the
system. A delay could be economically devastating in the case of an
animal disease outbreak such as foot-and-mouth disease (FMD), both in
terms of the impact on the domestic herd and the implications from the
loss of trading partners.
We appreciate the inclusion of NAIS funding in the fiscal year 2005
and fiscal year 2006 agriculture funding bills, and strongly encourage
the committee to significantly increase that amount in this year's
version of the agriculture appropriations bill. Progress has been seen
in making premises registration available in all 50 States and multiple
tribes. Nationally, just over 10 percent of all livestock premises are
now identified, but much work remains to bring the remaining 90 percent
into the system. Outreach and education are key to inform producers
about the purpose of the NAIS; it is critical to immediately correct
the many misconceptions that have circulated and may discourage
producers from participating. In addition to continuing funding for
APHIS's premises registration activities in cooperation with State
animal health officials, we believe it is important to proceed with the
next phases of the NAIS--the individual identification of animals or
groups of animals, and the tracking of animal movements. The department
has turned to the private sector to provide the data repository
necessary for animal tracking; therefore, we encourage the committee to
consider a cost-share funding allocation for privately managed, non-
profit animal ID databases maintained by agricultural organizations.
Such databases should be capable of providing multi-species data
repository services and access to that data by State and Federal
veterinary officials in the event of an animal health issue in order to
meet public needs and justify a Federal funding appropriation.
While there are still some major issues to be resolved, primarily
data confidentiality, AFBF strongly supports the NAIS. Timely
implementation of this critical program will not only add to our
ability to trace a diseased animal back to the source but will also
reassure the public and our trading partners of a safe food supply
system.
PROGRAMS TO INCREASE AGRICULTURAL EXPORTS
Creating new and expanding existing overseas markets for U.S.
agricultural and food products is essential for a healthy agricultural
economy anytime, but especially in 2006/07 when the USDA is forecasting
a reduction in net U.S. farm income of $15 billion. We recommend full
funding of all export development and expansion programs consistent
with our WTO commitments.
Export Development and Expansion Programs.--The Market Access
Program, the Foreign Market Development Program, the Emerging Markets
Program and the Technical Assistance for Specialty Crops program are
all very effective export development and expansion programs that have
demonstrated substantial increases in demand for U.S. agriculture and
food products abroad. These programs are also important because they
attract larger amounts of private sector funding into development and
expansion activities for U.S. agriculture and food exports. We
recommend full funding of these programs
Farm Bureau also supports General Sales Manager credit guarantee
programs. These programs are important because they make available
commercial financing to buyers of U.S. food and agricultural exports
that might otherwise not be available. They should be funded at fully
authorized levels.
Direct assistance for U.S. agricultural exports is also authorized
by the Export Enhancement Program, a program to counter unfair trading
practices of foreign countries. Farm Bureau supports the funding and
use of this program in all countries and for all commodities where the
United States faces unfair competition. The Dairy Export Incentive
Program is another similar program that allows U.S. dairy producers to
compete with foreign nations that subsidize their diary exports. We
recommend full funding of this program as well.
Food Aid Programs.--We urge full funding of Public Law 480 that
serves as the primary means by which the United States provides needed
foreign food assistance through the purchase of U.S. commodities. In
addition to providing short-term humanitarian assistance, the program
helps to develop long-term commercial export markets. We oppose any
efforts to reduce funding of Public Law 480, especially efforts to
transfer funding to other food aid and development programs outside the
jurisdiction of USDA. Further, the International Food for Education
Program will be an effective platform for delivering severely needed
food aid and educational assistance and we urge its full support.
Plant and Animal Health Monitoring, Pest Detection and Control.--
USDA services and programs that facilitate U.S. exports by certifying
plant and animal health to foreign customers, that protect U.S.
agricultural production from foreign pests and diseases, and fight
against unsound non-tariff trade barriers by foreign governments should
be funding priorities. Plant and animal health monitoring, surveillance
and inspection are crucial. We support funding increases for improved
plant pest detection and eradication, management of animal health
emergencies and to increase the availability of animal vaccines.
Expansion of Plant Protection and Quarantine personnel and facilities
is necessary to protect U.S. agriculture from new, oftentimes virulent
and costly pest problems that enter the United States from foreign
lands.
APHIS Trade Issues Resolution and Management.--Full funding is
needed for APHIS trade issues resolution and management. As Federal
negotiators and U.S. industry try to open foreign markets to U.S.
exports, they consistently find that other countries are raising pest
and disease concerns (i.e., sanitary and phytosanitary measures), real
or contrived, to resist or prohibit the entry of American products into
their markets. Only APHIS has the technical capability to respond
effectively to this resistance. It requires however, placing more APHIS
officers at U.S. ports and in overseas locations where they can monitor
pest and disease conditions, negotiate trading protocols with other
countries and intervene when foreign officials wrongfully prevent the
entry of American imports. It is essential that APHIS be positioned to
swiftly and forcefully respond to such issues when and where they
arise.
APHIS Biotech Regulatory Service (BRS).--Agricultural biotechnology
is an extremely promising technology and all reasonable efforts must be
made to allow continued availability and marketability of biotech tools
for farmers. BRS plays an important role in overseeing the permit
process for products of biotechnology. Funding for BRS personnel and
activities are essential for ensuring public confidence and
international acceptance of biotechnology products. AFBF supports an
increase in spending to $11.417 million ($8.584 in 2006) for BRS
because it will enable the USDA to increase inspections of genetically-
modified crop field test sites and enhance its capacity to regulate
transgenic animals, arthropods, and disease agents.
Foreign Agricultural Service (FAS).--The USDA's Foreign
Agricultural Service will require sufficient funding to expand services
to cover all existing and potential market posts. We support
continuance of funding at the 2006 appropriations level for the office
of the secretary for cross-cutting trade negotiations and biotechnology
resources.
PROGRAMS THAT MAINTAIN THE USE OF AGRICULTURE INPUTS
USDA must continue to work with EPA, agricultural producers, food
processors and registrants to provide farm data required to ensure that
agricultural interests are properly considered and fully represented in
all pesticide registration, tolerance reassessment re-registration, and
registration review processes. In order to participate effectively in
the process of ensuring that crop protection tools are safe and remain
available to agriculture, USDA must have all the resources necessary to
provide economic benefit, scientific analysis and usage information to
EPA. To this end, funding should be maintained or increased, and in
some cases restored, to the following offices and programs:
Office of Pest Management Policy (OPMP).--OPMP has the primary
responsibility for coordination of USDA's Food Quality Protection Act
(FQPA) and crop protection obligations and interaction with EPA. Proper
funding is vital for the review of tolerance reassessments,
particularly dietary and worker exposure information; to identify
critical uses, benefits and alternatives information; and to work with
grower organizations to develop strategic pest management plans. The
funding to OPMP should be designated under the secretary of
agriculture's office, rather than as an add-on to the Agricultural
Research Service budget.
Agriculture Research Service (ARS).--Integrated Pest Management
(IPM) research, minor use tolerance research (IR-4) must have funding
maintained, and research on alternatives to methyl bromide must have
funding restored and receive future funding to satisfactorily address
the unique concerns of these programs. Research is also needed to
identify new biological pest control measures and to control pesticide
migration.
Cooperative State Research, Education and Extension Service
(CSREES).--Funding must be maintained, in some cases restored, and full
future funding provided for Integrated Pest Management research grants,
IPM application work, pest management alternatives program, expert IPM
decision support system, minor crop pest management project (IR-4),
crops at risk from FQPA implementation, FQPA risk avoidance and
mitigation program for major food crop systems, methyl bromide
transition program, regional crop information and policy centers and
the pesticide applicator training program.
Economic Research Service (ERS).--USDA and EPA rely on ERS programs
to provide unique data information and they should be properly funded
including IPM research, pesticide use analysis program and the National
Agriculture Pesticide Impact Assessment Program.
Food Quality and Crop Protection Regulation.--Additional funding
for proper regulation of pesticides is needed in the following
programs: National Agriculture Statistics Service pesticide use
surveys; Food Safety Inspection Service increased residue sampling and
analysis; Agricultural Marketing Service; and the Pesticide Data
Program.
______
Prepared Statement of the American Indian Higher Education Consortium
Mr. Chairman and Members of the Subcommittee, on behalf of the
American Indian Higher Education Consortium (AIHEC) and the 33 Tribal
Colleges and Universities that comprise the list of 1994 Land Grant
Institutions, thank you for this opportunity to share our funding
requests for fiscal year 2007 (fiscal year 2007).
This statement is presented in three parts: (a) a summary of our
fiscal year 2007 funding recommendation, (b) a brief background on
Tribal Colleges and Universities, and (c) an outline of the 1994 Tribal
College Land Grant Institutions' plan for using our land grant programs
to fulfill the agricultural potential of American Indian communities,
and to ensure that American Indians have the skills and support needed
to maximize the economic development potential of their resources.
Summary of Requests
We respectfully request the following funding levels for fiscal
year 2007 for our land grant programs established within the USDA
Cooperative State Research, Education, and Extension Service (CSREES)
and Rural Development mission areas. In CSREES, we specifically
request: $12 million payment into the Native American endowment fund;
$3.3 million for the higher education equity grants; $5 million for the
1994 institutions' competitive extension grants program; $3 million for
the 1994 Institutions' competitive research grants program; and in
Rural Development--Rural Community Advancement Program (RCAP), that $5
million be provided for each of the next 5 fiscal years for the tribal
college community facilities grants program. RCAP grants help to
address the critical facilities and infrastructure needs at the
colleges that impede our ability to participate fully as land grant
partners.
Background on Tribal Colleges and Universities
The first Morrill Act was enacted in 1862 specifically to bring
education to the people and to serve their fundamental needs. Today,
over 140 years after enactment of the first land grant legislation, the
1994 Land Grant Institutions, as much as any other higher education
institutions, exemplify the original intent of the land grant
legislation, as they are truly community-based institutions.
The Tribal College Movement was launched in 1968 with the
establishment of Navajo Community College, now Dine College, serving
the Navajo Nation. Rapid growth of tribal colleges soon followed,
primarily in the Northern Plains region. In 1972, the first six
tribally controlled colleges established the American Indian Higher
Education Consortium to provide a support network for member
institutions. Today, AIHEC represents 34 Tribal Colleges and
Universities 3 of which comprise the list of 1994 Land Grant
Institutions located in 12 States--created specifically to serve the
higher education needs of American Indian students. Annually, they
serve approximately 30,000 full- and part-time students from over 250
Federally recognized tribes.
All of the 1994 Land Grant Institutions are accredited by
independent, regional accreditation agencies and like all institutions
of higher education, must undergo stringent performance reviews to
retain their accreditation status. Tribal colleges serve as community
centers by providing libraries, tribal archives, career centers,
economic development and business centers, public meeting places, and
child care centers. Despite their many obligations, functions, and
notable achievements, tribal colleges remain the most poorly funded
institutions of higher education in this country. Most of the 1994 Land
Grant Institutions are located on Federal trust territory. Therefore,
States have no obligation and in most cases, provide no funding to
tribal colleges. In fact, most States do not even fund our institutions
for the non-Indian State residents attending our colleges, leaving the
tribal colleges to absorb the per student operational costs for non-
Indian students enrolled in our institutions, accounting for
approximately 20 percent of our student population. Under these
inequitable financing conditions and unlike our State land grant
partners, our institutions do not benefit from economies of scale--
where the cost per student to operate an institution is diminished by
the increased size of the student body.
As a result of 200 years of Federal Indian policy--including
policies of termination, assimilation and relocation--many reservation
residents live in abject poverty comparable to that found in Third
World nations. Through the efforts of Tribal Colleges and Universities,
American Indian communities are receiving services they need to
reestablish themselves as responsible, productive, and self-reliant
citizens. It would be regrettable not to expand the very modest
investment in, and capitalize on, the human resources that will help
open new avenues to economic development, specifically through
enhancing the 1994 Institutions' land grant programs, and securing
adequate access to information technology.
1994 Land Grant Programs--Ambitious Efforts to Reach Economic
Development Potential
Tragically, due to lack of expertise and training, millions of
acres on our reservations lie fallow, under used, or have been
developed through methods that render the resources nonrenewable. The
Equity in Educational Land Grant Status Act of 1994 is starting to
rectify this situation and is our hope for future advancement.
Our current land grant programs are small, yet very important to
us. It is essential that American Indians explore and adopt new and
evolving technologies for managing our lands. We have the potential of
becoming significant contributors to the agricultural base of the
Nation and the world.
Native American Endowment Fund.--Endowment installments that are
paid into the 1994 Institutions' account remain with the U.S. Treasury.
Only the annual interest, less the USDA's administrative fee, is
distributed to the colleges. The latest gross annual interest yield
(fiscal year 2005) is $2,577,357 after the USDA's administrative fee of
$103,094 is deducted; $2,474,263 is the amount available to be
distributed among all of the eligible 1994 Land Grant Institutions by
statutory formula. While we have not yet been provided the latest
breakdown of funds distributed to each of the 1994 institutions, last
year USDA's administrative fee amounted to more than the payment
amounts to 75 percent of the 1994 Land Grant Institutions. After the
distribution amounts are determined for this year's disbursement, we
fully expect similar results. We respectfully ask that the Subcommittee
review the Department's administrative fee and consider reducing it for
this program, so that more of these already limited funds can be
utilized to conduct vital 1994 Land Grant community based programs.
Just as other land grant institutions historically received large
grants of land or endowments in lieu of land, this endowment assists
1994 Land Grant Institutions in establishing and strengthening our
academic programs in such areas as curricula development, faculty
preparation, instruction delivery, and to help address critical
facilities and infrastructure issues. Many of the colleges have used
the endowment funds in conjunction with the Education Equity Grant
funds to develop and implement their academic programs. As earlier
stated, tribal colleges often serve as primary community centers and
although conditions at some have improved substantially, many of the
colleges still operate under less than satisfactory conditions. In fact
most of the tribal colleges cite improved facilities as one of their
highest priorities. Several of the colleges have indicated the need for
immediate and substantial renovations to replace buildings that have
long exceeded their effective life spans and to upgrade existing
facilities to address accessibility and safety concerns.
Endowment payments increase the size of the corpus held by the U.S.
Treasury and thereby increase the annual interest yield disbursed to
the 1994 land grant institutions. This additional funding would be very
helpful in our efforts to continue to support faculty and staff
positions and program needs within Agriculture and Natural Resources
departments, as well as to continue to help address the critical and
very expensive facilities needs at our institutions. Currently, the
amount that each college receives from this endowment is not adequate
to address curricula development and instruction delivery, as well as
make even a dent in the necessary facilities projects at the colleges.
In order for the 1994 Institutions to become full partners in this
Nation's great land grant system, we need and frankly, under treaty
obligations, warrant the facilities and infrastructure necessary to
fully engage in education and research programs vital to the future
health and well being of our reservation communities. We respectfully
request the subcommittee fund the fiscal year 2007 endowment payment at
$12 million, $120,000 above fiscal year 2006 and the in the President's
Budget recommendation--restoring the across-the-board cut imposed on
fiscal year 2006 appropriated levels. 1994 Institutions' Educational
Equity Grant Program: Closely linked with the endowment fund, this
program is designed to assist 1994 land grant institutions with
academic programs. Through the modest appropriations made available
since fiscal year 2001, the tribal colleges have been able to begin to
support courses and plan activities specifically targeting the unique
needs of their respective communities.
The 1994 Institutions have developed and implemented courses and
programs in natural resource management; environmental sciences;
horticulture; forestry; bison production and management; and especially
food science and nutrition to address epidemic rates of diabetes and
cardiovascular disease on reservations. If more funds were available
through the Educational Equity Grant Program, tribal colleges could
channel more of their endowment yield to supplement other facilities
funds to address their critical infrastructure issues. Authorized at
$100,000 per eligible 1994 Institutions, in fiscal year 2006,
approximately $68,000 or two-thirds of the authorized level was
available to the 1994 institutions, after across-the-board cuts and
Department fees were applied to the initial appropriated level of
$2,250,000. We respectfully request full funding of $3.3 million to
allow the tribal colleges to build upon the courses and successful
activities that have been launched.
Extension Programs.--The 1994 Institutions' extension programs
strengthen communities through outreach programs designed to bolster
economic development; community resources; family and youth
development; natural resources development; agriculture; as well as
health and nutrition awareness.
In fiscal year 2006, $3,273,000 was appropriated for the 1994
Institutions' competitive extension grants, a slight increase over
fiscal year 2005. Without adequate funding, 1994 Institutions' ability
to maintain existing programs and to respond to emerging issues such as
food safety and homeland security, especially on border reservations,
is severely limited. Increases in funding are needed to support these
vital programs designed to address the inadequate extension services
provided to Indian reservations by their respective State programs. It
is important to note that the 1994 extension program is designed to
complement the Indian Reservation Extension Agent program and does not
duplicate extension activities. 1994 Land Grant programs are funded at
very modest levels. The tribal college land grants have applied their
ingenuity for making the most of every dollar they have at their
disposal by leveraging funds to maximize their programs whenever
possible. For example, College of Menominee Nation (CMN) in Keshena,
Wisconsin, has a multiyear program that leverages funding from several
activities to expand its extension program, which focuses on
strengthening the economic capacity of the local community. Partnering
with U.S. Department of Health and Human Services, CMN is designing
curriculum that involves tribal elders, relevant service providers,
local schools, the Commission on Aging, and health clinics designed to
encourage minority youth to enter Allied Health fields. With a grant
from the Wisconsin Department of Transportation, the college's
extension and outreach offers the Transportation Alliance for New
Solutions (TrANS) program. This is a 120 hour program designed to train
women and minorities in roads construction. In addition, the Federal
Highway Administration and the Wisconsin Department of Transportation
have provided grant funds to CMN extension and outreach to conduct a
Summer Transportation Institute focusing on middle school students.
Students spend 4 weeks exploring various careers within the
transportation industry. CMN is just one example of the innovative
programs being conducted at 1994 Institutions. To continue and expand
these successful programs, we request the Subcommittee support this
competitive program by appropriating $5 million to sustain the growth
and further success of these essential community based programs.
1994 Research Program.--As the 1994 Land Grant Institutions have
begun to enter into partnerships with 1862/1890 land grant institutions
through collaborative research projects, impressive efforts to address
economic development through land use have come to light. Our research
program illustrates an ideal combination of Federal resources and
tribal college-state institutional expertise, with the overall impact
being far greater than the sum of its parts. We recognize the budget
constraints under which Congress is functioning. However, $1,039,000,
the fiscal year 2006 appropriated level, is a 4.4 percent decrease in
funding that was already grossly inadequate. This research program is
vital to ensuring that tribal colleges may finally become full partners
in the Nation's land grant system. Many of our institutions are
currently conducting agriculture based applied research, yet finding
the resources to conduct this research to meet their communities' needs
is a constant challenge. This research authority opens the door to new
funding opportunities to maintain and expand the research projects
begun at the 1994 Institutions, but only if adequate funds are
appropriated. $1,039,000 for 33 institutions to compete for is clearly
inadequate. Project areas being studied include soil and water quality,
amphibian propagation, pesticide and wildlife research, range cattle
species enhancement, and native plant preservation for medicinal and
economic purposes. We strongly urge the Subcommittee to fund this
program at a minimum of $3 million to enable our institutions to
develop and strengthen their research potential.
Rural Community Advancement Program (RCAP).--In fiscal year 2006,
$4,464,000 of the RCAP funds appropriated for loans and grants to
benefit Federally recognized American Indian tribes were targeted for
community facility grants for improvements at Tribal Colleges and
Universities. This amounts to an increase of $464,000 over the level
that had been allocated to the program each year since it began in
fiscal year 2001. This program requires a minimum 25 percent non-
Federal match. Tribal colleges are chartered by their respective
tribes, which enjoy a government-to-government relationship with the
Federal Government. Due to this relationship, tribal colleges have very
limited access to non-Federal dollars making non-Federal matching
requirements a significant barrier to our colleges' ability to compete
for much needed funds. The 2002 Farm Security and Rural Investment Act,
(Public Law 107-171) included language limiting the non-Federal match
requirement for the Rural Cooperative Development Grants to no more
than 5 percent in the case of a 1994 institution. We would like to have
this same language applied to the RCAP community facilities grants for
tribal colleges to open the door to more 1994 Institutions to compete
for these dollars.
We urge the Subcommittee to designate $5 million for each of the
next 5 fiscal years to afford the 1994 institutions the means to
aggressively address critical facilities needs, thereby allowing them
to better serve their students and respective communities.
Additionally, we request that Congress include language directing the
agency to limit the non-Federal matching requirement to not more than 5
percent, the same level as applied to the Rural Cooperative Development
Grants program, to help the 1994 land grant institutions to effectively
address critical facilities and construction issues at their
institutions.
Conclusion
The 1994 Land Grant Institutions have proven to be efficient and
effective vehicles for bringing educational opportunities to American
Indians and hope for self-sufficiency to some of this Nation's poorest
regions. The modest Federal investment in the 1994 Land Grant
Institutions has already paid great dividends in terms of increased
employment, education, and economic development. Continuation of this
investment makes sound moral and fiscal sense. American Indian
reservation communities are second to none in their potential for
benefiting from effective land grant programs and as earlier stated no
institutions better exemplify the original intent of the land grant
concept than the 1994 Land Grant Institutions.
We appreciate your support of the Tribal Colleges and Universities
and we ask you to renew your commitment to help move our communities
toward self-sufficiency. We look forward to continuing our partnership
with you, the U.S. Department of Agriculture, and the other members of
the Nation's land grant system--a partnership that will bring equitable
educational, agricultural, and economic opportunities to Indian
Country.
Thank you for this opportunity to present our funding proposals to
this Subcommittee. We respectfully request your continued support an
______
Prepared Statement of the American Public Power Association
The American Public Power Association (APPA) is the national
service organization representing the interests of over 2,000 municipal
and other state and locally owned utilities throughout the United
States (all but Hawaii). Collectively, public power utilities deliver
electricity to one of every seven electricity consumers (approximately
43 million people), serving some of the nation's largest cities.
However, the vast majority of APPA's members serve communities with
populations of 10,000 people or less.
We appreciate the opportunity to submit this statement outlining
our fiscal year 2007 funding priorities within the jurisdiction of the
Agriculture, Rural Development, and Related Agencies Subcommittee.
Department of Agriculture: Rural Utility Service Rural Broadband Loan
Program
APPA urges the Subcommittee to fully fund the Rural Utility
Service's (RUS) Rural Broadband Loan Program at $10 million, as
authorized in the 2002 Farm Bill. A funding level of $10 million would
produce approximately $356 million in RUS loans for fiscal year 2007.
APPA believes it is important to provide incentives for the
deployment of broadband to rural communities, many of which lack
broadband service. Increasingly, access to advanced communications
services is considered vital to a community's economic and educational
development. In addition, the availability of broadband service enables
rural communities to provide advanced health care through telemedicine
and to promote regional competitiveness and other benefits that
contribute to a high quality of life. Approximately one-fourth of
APPA's members are currently providing broadband service in their
communities. Several APPA members are planning to apply for RUS
broadband loans to help them finance their broadband projects.
______
Prepared Statement of the American Society of Agronomy, Crop Science
Society of America, and Soil Science Society of America
Dear Chairman Bennett, Ranking Member Kohl and Members of the
Subcommittee: On behalf of the American Society of Agronomy, Crop
Science Society of America, Soil Science Society of America (ASA/CSSA/
SSSA), we are pleased to submit comments in strong support of enhanced
public investment in food and agricultural research, extension and
education as a critical component of federal appropriations for fiscal
year 2007 and beyond. With nearly 18,000 members, ASA/CSSA/SSSA are the
largest life science professional societies in the United States
dedicated to the agronomic, crop and soil sciences. ASA/CSSA/SSSA play
a major role in promoting progress in these sciences through the
publication of quality journals and books, convening meetings and
workshops, developing educational, training, and public information
programs, providing scientific advice to inform public policy, and
promoting ethical conduct among practitioners of agronomy and crop and
soil sciences. The programs and activities of ASA/CSSA/SSSA are
tailored not only to our members' interests and scientific advancement,
but also serve the public interest. ASA/CSSA/SSSA publish six peer-
reviewed journals in which over 1100 scientific articles are published
yearly. The peer-review procedures for manuscripts published in ASA/
CSSA/SSSA journals as well as our activities and procedures for
publishing ensure the highest quality and integrity in our scientific
literature.
ASA/CSSA/SSSA understand the challenges the Senate Agriculture
Appropriations Subcommittee faces with the tight agriculture budget for
fiscal year 2007. We also recognize that the Agriculture Appropriations
bill has many valuable and necessary components, and we applaud the
efforts of the Subcommittee to fund mission-critical research through
the USDA-Cooperative State, Research, Education and Extension Service
as well as its intramural research portfolio funded through the
Agricultural Research Service. We are particularly grateful to the
Subcommittee for funding the NRI at $181 million in fiscal year 2006.
Below we have highlighted recommendations for the fiscal year 2007
appropriations cycle.
Agricultural Research Service
ASA/CSSA/SSSA understand the agency's need to reprogram
approximately $49.1 million in funding to higher priority areas such as
homeland security, emerging diseases, food safety, obesity, climate
change, invasive species, and genomics and genetics. ASA/CSSA/SSSA
applaud ARS's ability to respond quickly and flexibly to rapidly
changing national needs. The proposed increase of $57.7 in new monies
for these high priority areas is also commended. However, ASA/CSSA/SSSA
are concerned that the proposed overall cut in total funding for ARS of
$123, or 11 percent, from fiscal year 2006 enacted, could result in
decreased research capacity and/or the elimination of important
research programs currently underway. ASA/CSSA/SSSA urge the
Subcommittee to act judiciously and not implement such drastic funding
cuts for this critical research agency.
Cooperative State Research, Education, and Extension Service
National Research Initiative.--ASA/CSSA/SSSA strongly endorse the
President's proposed fiscal year 2007 budget increase of $66.3 million
for the National Research Initiative Competitive Grants Program (NRI)
which would bring total funding for this important research program to
$247.5 million. However, we do not support the President's proposal to
transfer the $42.3 million Sec 406 (Integrated Research, Education, and
Extension program) program into the NRI. This transfer may result in
the loss of critical programs such as the Organic Transitions Program.
NRI Integrated Research.--ASA/CSSA/SSSA request that any new monies
appropriated for the NRI, as requested by the administration, allow the
Secretary the discretion to apply up to 30 percent towards carrying out
the NRI integrated research, extension and education competitive grants
program.
Sustainable Agriculture Research and Education Programs.--ASA/CSSA/
SSSA oppose the administration's request to cut funding for SARE by
more than $3 million. At a minimum, the Subcommittee should fund SARE
at the fiscal year 2006 enacted (pre-rescission) level of $12.4
million.
Indirect Costs.--ASA/CSSA/SSSA applaud the administration's
proposal to eliminate the indirect cost cap on the NRI, set at 20
percent for fiscal year 2006, which will broaden its appeal by putting
the NRI on equal footing with other federal competitive grants programs
such as those of NSF and NIH. However, we are concerned that new
funding was not provided to cover this change.
Research Formula Funding.--ASA/CSSA/SSSA oppose the
administration's proposal to change the methodology for distributing
Hatch Funds and McIntire-Stennis Funds through a multistate,
competitively awarded proposal program. Such drastic changes would be
detrimental to the entire USDA research portfolio. Because of their
timing and potential regional and intra-state impacts, much of the
infrastructure needed to conduct competitively funded research could be
compromised if formula funds were to be redirected as proposed, and
could irreparably damage programs housed at each land-grant university.
This would mean a huge and potentially damaging loss of national
infrastructure to conduct agricultural research. The private sector
depends heavily on the agricultural technology and training provided by
the U.S. land grant system, and the impact of such a drastic transfer
of formula funds to a competitive grants program would affect not only
the viability of U.S. industry but also the health and survival of
millions of people across the globe. Moreover, as noted below,
investments in formula funded research show an excellent annual rate of
return.
Agrosecurity.--ASA/CSSA/SSSA support the request of the
administration that $12 million be provided for the Animal and Plant
Diagnostic Labs and EDEN to facilitate protecting America's
agricultural production systems. ASA/CSSA/SSSA also endorse the
administration's request ($5.0 million) for the Agrosecurity Curricula
Development, which we consider to be a critical new initiative. Recent
security threats facing America require new and expanded agricultural
research to protect our nation's natural resources, food processing and
distribution network, and rural communities that will secure America's
food and fiber system.
Higher Education.--ASA/CSSA/SSSA urge the Subcommittee to fund the
Institution Challenge Grants at $6 million which will restore some of
the funding lost due to the 2006 rescission. We applaud the
Administration's budget request of $4.445 million for the Graduate
Fellowships Grants.
Extension Formula Funding.--Extension forms a critical part of the
research, education and extension program integration, the hallmark of
CSREES which in not seen in other agencies. Unfortunately, the Smith
Lever 3(b) and 3(c) account has been flat-funded (in constant dollars,
this account has seen a gradual erosion in funding), in recent years.
Moreover, the current trend of annual rescissions has resulted in an
even lower funding level for this and other vital extension programs.
ASA/CSSA/SSSA proposes, at a minimum, that the Subcommittee restore
funding for Smith Lever 3(b) and 3(c) to the fiscal year 2006 pre-
rescission enacted level of $275.73 million.
A balance of funding mechanisms, including intramural, competitive
and formula funding, is essential to maintain the capacity of the
United States to conduct both basic and applied agricultural research,
improve crop and livestock quality, and deliver safe and nutritious
food products, while protecting and enhancing the Nation's environment
and natural resources. In order to address these challenges and
maintain our position in an increasingly competitive world, we must
continue to support research programs funded through ARS and CSREES.
Congress must enhance funding for agricultural research to assure
Americans of a safe and nutritious food supply and to provide for the
next generation of research scientists. According to the USDA's
Economic Research Service (Agricultural Economic Report Number 735),
publicly funded agricultural research has earned an annual rate of
return of 35 percent. This rate of return suggests that additional
allocation of funds to support research in the food and agricultural
sciences would be beneficial to the U.S. economy. We must also continue
support for CSREES-funded education programs which will help ensure
that a new generation of educators and researchers is produced.
Finally, we need to ensure support for extension at CSREES to guarantee
that these important new tools and technologies reach and are utilized
by producers and other stakeholders.
As you lead the Congress in deliberation on funding levels for
agricultural research, please consider American Society of Agronomy,
Crop Science Society of America, Soil Science Society of America as
supportive resources. We hope you will call on our membership and
scientific expertise whenever the need arises.
______
Prepared Statement of the American Society of Civil Engineers
The American Society of Civil Engineers (ASCE) is pleased to offer
this testimony on the President's proposed budget for the Natural
Resources Conservation Service (NRCS) for fiscal year 2007.
ASCE was founded in 1852 and is the country's oldest national civil
engineering organization. It represents more than 139,000 civil
engineers in private practice, government, industry and academia who
are dedicated to the advancement of the science and profession of civil
engineering. ASCE is a 501(c)(3) non-profit educational and
professional society.
The Administration's proposed fiscal year 2007 budget includes only
$15.3 million in discretionary appropriations to fund rehabilitation of
unsafe and seriously deficient dams that were originally constructed
under USDA Watershed Programs. This is more than a 50 percent reduction
from the fiscal year 2006 when $31.5 million was appropriated by
Congress.
ASCE respectfully requests that this Subcommittee increase the
Administration's proposed appropriation to $75 million. This amount is
$60 million less than the total $135 million authorized in the 2002
Farm Bill which includes discretionary funds and Commodity Credit
Corporation (CCC) mandatory funding.
Of the 78,000 dams in the United States, 95 percent are regulated
by the states. Approximately 10,400 of these dams are small watershed
structures built under the United States Department of Agriculture
programs authorized by Congress beginning in the 1940s (primarily the
Flood Control Act of 1944, Public Law 78-534 and the Watershed
Protection and Flood Control Act of 1953, Public Law 83-566). By the
year 2020, more than 85 percent of all dams in the United States will
be more than 50 years old, the typical useful life span.
THE URGENT NEED FOR FEDERAL ACTION
The benefits from the 11,000 improved watershed dams are enormous.
The dams provide downstream flood protection, water quality,
irrigation, local water supplies and needed recreation. Yet these
benefits to lives and property are threatened. The small watershed dams
are approaching the end of their useful lives as critical components
deteriorate. The reservoirs become completely filled with sediment,
downstream development increases the potential hazards and
significantly changes the design standards, and many dams do not meet
State dam safety standards.
Although these dams were constructed with technical and financial
assistance from the Department of Agriculture, local sponsors were then
responsible for operation and maintenance of the structures. Now these
dams are approaching the end of their useful lives, yet the resource
need is still great. The flood control benefits, the irrigation needs,
the water supply, the recreation and the conservation demands do not
end. In fact, they are more necessary than ever as downstream
development has dramatically increased the number of people, properties
and infrastructure that are protected by the flood control functions of
these dams. The Federal Government has a critical leadership role in
assuring that these dams continue to provide critical safety and
resource needs.
The NRCS in the Department of Agriculture has estimated the cost of
rehabilitating the small watershed dams at $542 million. While the
average rehabilitation cost per dam is approximately $242,000, the
local sponsors typically do not have sufficient financial resources to
complete these necessary repairs to assure the safety and critical
functions of these dams. The Federal Government must recognize the
urgent need to provide assistance to maintain these dams. Congress
should reinforce its earlier commitment to the goals of the Flood
Control Acts of 1944 and 1953.
Since the program began, there have been 136 watershed
rehabilitation projects initiated in 21 States, which include 47
completed rehabilitation projects and 89 projects either in the
planning, design or construction phase. It is clear from these 136
projects as well as the 76 projects, which requested assistance but
were unable to be funded in fiscal year 2006, just how much demand
exists; and how successful this USDA program is.
EXTENT OF THE PROBLEM
ASCE views the funding of dam safety repairs as a critical need for
the nation. In ASCE's 2005 Report Card for America's Infrastructure
dams received a grade of D. Nearly 3,500 unsafe dams have been
identified in this country and many of the owners do not have
sufficient funding sources.
More that 900 watershed dams across the nation will need
rehabilitation in just the next five years at a cost of over $570
million. These numbers will increase as dams get older and thousands of
people and millions of dollars of property could be at risk if these
dams should fail. That is why Congress authorized $600 million for
rehabilitation for 2003-2007 in the last Farm Bill. Local watershed
project sponsors provide 35 percent of the cost of the rehabilitation
projects and many have local cost-share funds ready for projects that
could be lost if the Federal money isn't made available.
Many of these urgent repairs and modifications are needed because
of the following: downstream development within the dam failure flood
zone, replacement of critical dam components, inadequate spillway
capacity due to significant watershed development and increased design
criteria due to downstream development.
Many of the small watershed dams do not meet minimum State dam
safety standards and many that are being counted on for flood
protection can no longer provide flood protection due to excessive
sedimentation and significant increases in runoff from development
within the watershed. The dams suffer from cracked concrete spillways,
failing spillways, inoperable lake drains and other problems that
require major repairs that are beyond the capability of the local
sponsors.
THE COST OF NO ACTION
These small watershed dams have been a silent and beneficial part
of the landscape. Failure to make the necessary upgrades, repairs and
modifications will increase the likelihood of dam failures. Continued
neglect of these structures may easily result in reduced flood control
capacity causing increased downstream flooding. Failure of a dam
providing water supply would result in a lack of drinking water or
important irrigation water.
The recent dam failures in Hawaii and Missouri, and the near
failure in Massachusetts last year have brought into tragic focus for
the public the impact aging and under-funded dams can have on a
community. The floods in Georgia in 1993 and in the Midwest in 1994 are
recent reminders of natural events that can cause enormous disasters,
including dam failures. The failure to act quickly will clearly result
in continued deterioration and a greater number of unsafe dams until a
dam failure disaster occurs. The failure of a 38-foot tall dam in New
Hampshire in 1996, which caused $5.5 million in damage and one death,
should be a constant reminder that dam failures happen and can have
tragic consequences.
Completion of the needed repairs will result in safer dams, as well
as continued benefits. Failure to establish a mechanism to reinvest in
these structures will greatly increase the chances of dam failures and
loss of benefits, both having significant economic and human
consequences. Costs resulting from flood damage and dam failure damage
are high and unnecessarily tap the Federal Government through disaster
relief funds or the National Flood Insurance Program.
RECOMMENDATION
ASCE asks that the Subcommittee view funding the Rehabilitation of
Watershed Dams as a significant re-investment in the benefits of the
program and an investment in the safety of these dams. Therefore, ASCE
respectfully requests that this Subcommittee provide additional
appropriations beyond the Administration's request to $75 million for
fiscal year 2006.
The condition of our Nation's dams, and the need for watershed
structure rehabilitation, should be a national priority before we have
to clean up after dam failures that we know are likely to happen if
nothing is done.
______
Prepared Statement of the American Society for Microbiology
The American Society for Microbiology (ASM) appreciates the
opportunity to submit testimony on the fiscal year 2007 appropriation
for the United States Department of Agriculture (USDA). The ASM is the
largest single life science organization in the world, with more than
42,000 members who work in academic, industrial, medical, and
governmental institutions. The ASM's mission is to enhance the science
of microbiology, to gain a better understanding of life processes, and
to promote the application of this knowledge for improved plant, animal
and human health, and for economic and environmental well-being.
The USDA sponsors research and education programs, which meet the
USDA's strategic goals of enhancing competitiveness and sustainability
of U.S. agriculture; increasing economic opportunities and improving
quality of life in rural America; enhancing protection and safety of
the Nation's agriculture and food supply; improving the Nation's
nutrition and health; and protecting and enhancing the Nation's natural
resource base and environment. U.S. agriculture faces new challenges,
including threats from emerging infectious diseases in plants and
animals such as avian influenza, as well as threats from climate
change, and public concern about food safety and security. It is
critical to increase the visibility and investment in agriculture
research to respond to these challenges. The ASM urges Congress to
provide increased funding for research programs within the USDA in
fiscal year 2007.
Microbiological research in agriculture is vital to understanding
and finding solutions to foodborne diseases, endemic diseases of long
standing, new and emerging plant and animal diseases, development of
new agriculture products and processes and addressing existing and
emerging environmental challenges. Unfortunately, Federal investment in
agricultural research has not kept pace with the need for additional
agricultural research to solve emerging problems. The USDA funds more
than 90 percent of all Federal support for the agricultural sciences.
According to the USDA Economic Research Service (ERS) report,
Agricultural Research and Development: Public and Private Investments
Under Alternative Markets and Institutions, the rate of return on
public investment in basic agricultural research is estimated to be
between 60 and 90 percent.
USDA National Research Initiative Competitive Grants Program
The National Research Initiative Competitive Grants Program (NRI)
was established in 1991 in response to recommendations outlined in
Investing in Research: A Proposal to Strengthen the Agricultural, Food
and Environmental System, a 1989 report by the National Research
Council's (NRC) Board on Agriculture. This publication called for
increased funding of high priority research that is supported by the
USDA through a competitive peer-review process directed at:
--Increasing the competitiveness of U.S. agriculture.
--Improving human health and well-being through an abundant, safe,
and high-quality food supply.
--Sustaining the quality and productivity of the natural resources
and the environment upon which agriculture depends.
Continued interest in and support of the NRI is reflected in two
subsequent NRC reports, Investing in the National Research Initiative:
An Update of the Competitive Grants Program of the U.S. Department of
Agriculture, published in 1994, and National Research Initiative: A
Vital Competitive Grants Program in Food, Fiber, and Natural Resources
Research, published in 2000.
Today, the NRI, housed within the USDA Cooperative State Research,
Education, and Extension Service (CSREES), supports research on key
problems of national and regional importance in biological,
environmental, physical, and social sciences relevant to agriculture,
food, and the environment on a peer-reviewed, competitive basis.
Additionally, the NRI enables the USDA to develop new partnerships with
other Federal agencies that advance agricultural science. Examples of
such collaborations include the USDA's involvement in the Microbial
Genome Sequencing Program, the Maize Genome Program, the Microbial
Observatories program, the Plant Feedstock Genomics for Bioenergy
program, the Metabolic Engineering program, and the Climate Change
Science Plan.
The ASM urges Congress to support the Administration's requested
increase for the NRI in fiscal year 2007. NRI's proposed increase comes
from shifting the CSREES Integrated Activities, such as food safety,
pest management, and water quality, making up $42.7 million of the
proposed increase, providing a net increase of $24 million for the NRI
including the additional responsibility of the Integrated Programs. The
ASM supports the Administration's effort to increase competitively
awarded funding mechanisms and believes that competitive grants ensure
the best science.
Additional funding for the NRI is needed to expand research in
microbial genomics and to provide more funding for merit reviewed basic
research with long-term potential for new discoveries and products. It
is critical to increase the visibility and investment in agriculture
research to respond to these challenges and we appreciate Congress's
efforts to fund the NRI at $181 million in fiscal year 2006 and urge
Congress to support the Administration's fiscal year 2007 request of
$247.5 million for this program.
Agricultural Research Service
The Agricultural Research Service (ARS) is the USDA's chief
scientific research agency, which conducts research to develop new
scientific knowledge, transfers technology to the private sector to
solve critical agricultural problems of broad scope and high national
priority, and provides access to scientific data. The ARS supports
approximately 1,200 individual research projects conducted by
scientists from the USDA at over 100 Federal facilities. The
Administration requests approximately $1.03 billion for the ARS in
fiscal year 2007, a 20 percent decrease from fiscal year 2006. The ASM
urges Congress to strongly support the ARS in fiscal year 2007.
USDA Food and Agriculture Defense Initiative
The Food and Agriculture Defense Initiative is an interagency
initiative to improve the Federal Government's capability to rapidly
identify and characterize a bioterrorist attack, by improving the
national surveillance capabilities in human health, food, agriculture,
and environmental monitoring. The ASM supports the Administration's
request for this initiative of $322 million for fiscal year 2007, an
increase of $127 million over fiscal year 2006. This does not include
funding for construction of the Ames, Iowa facility for animal research
and diagnostics, which was fully funded in fiscal year 2006. Of the
total amount, an increase of approximately $30 million for Food Defense
would enhance the Food Safety and Inspection Service's (FSIS) ability
to detect and respond to food emergencies and for the USDA's research
agencies to conduct related research. For Agriculture Defense, the
budget includes a $97 million increase to improve the Animal and Plant
Health Inspection Service's (APHIS) monitoring and surveillance of
plant and animal health, including wildlife; response capabilities,
including provisions for the National Veterinary Stockpile; and further
research on emerging and exotic diseases.
The ASM supports this greater emphasis on research in the Food and
Agriculture Defense Initiative and recommends an increase in funding,
both extramural and intramural, for research on pathogenic
microorganisms as part of the Food and Agriculture Defense Initiative.
Food Safety
The Centers for Disease Control (CDC) estimates that each year 76
million people get sick, more than 300,000 are hospitalized, and 5,000
die because of foodborne illnesses. Primarily the very young, the
elderly, and the immunocompromised are affected. Recent changes in
human demographics and food preferences, changes in food production and
distribution systems, microbial adaptation, and lack of support for
public health resources and infrastructure have led to the emergence of
novel as well as traditional foodborne diseases. With increasing travel
and trade opportunities, it is not surprising that now there is a
greater risk of contracting and spreading a foodborne illness locally,
regionally, and even globally. (MMWR 2004;53[No. RR-04]). The USDA's
Economic Research Service (ERS) estimates that the medical costs,
productivity losses, and costs of premature deaths for diseases caused
by just five types of foodborne pathogens exceeds $6.9 billion per year
in the United States. The USDA plays a vital role in the government's
effort to reduce the incidence of foodborne illness. Continued and
sustained research is important to safeguarding the Nation's food
supply and focusing on methods and technologies to prevent microbial
foodborne disease and emerging pathogens. The ASM supports the
requested increases for the Food and Agriculture Defense Initiative and
the Food Safety and Inspection Service. Without sustained significant
increases in the level of food safety research funding, meeting the
National Health Objectives for 2010 in all likelihood will not become
reality. The ASM recommends a substantial increase in food safety
research, which is essential to ensure the protection of the Nation's
health.
Genomics Initiative
The NRI and the ARS fund the USDA collaborative efforts in the
field of genomics. There are opportunities to leverage the USDA's
investments with those of the National Institutes of Health (NIH), the
Department of Energy (DOE), and the National Science Foundation (NSF)
in projects to map and sequence the genomes of agriculturally important
species of plants, animals, and microbes. Determining the function of
the sequenced genomes (functional genomics) and analyses of the data
(bioinformatics) now need investment for new management techniques and
tools. The USDA plays an important role in coordinating and
participating in interagency workgroups on domestic animal, microbial,
and plant genomics. Access to genomic information and the new tools to
utilize it have implications for virtually all aspects of agriculture.
The ASM urges Congress to provide strong support for the USDA genomics
initiative.
Emerging Infectious Diseases in Plants and Animals
The food production and distribution system in the United States is
vulnerable to the introduction of pathogens and toxins through natural
processes, global commerce, and intentional means. The ASM supports
increases in the USDA research budget for emerging diseases and
invasive species. Nearly 200 zoonotic diseases can be naturally
transmitted from animals to man and opportunistic plant pathogens and
soil-inhabiting microorganisms can be causal agents of infection and
disease in humans. For emerging diseases to be effectively detected and
controlled the biology, ecology, and mechanisms for pathogenicity of
the causal pathogens must be understood and weaknesses exploited to
limit their impact. This research will help address the risk to humans
from emerging diseases and opportunistic pathogens, and will ensure the
safety of plant and animal products. Additionally, expanded research is
needed to accelerate the development of information and technologies
for the protection of United States agricultural commodities, wildlife
and human health against emerging diseases.
Antimicrobial Resistance Research
The USDA plays a key role in addressing the national and global
increase in antimicrobial resistance and the complex issues surrounding
this public health threat. The ARS Strategic Plan for 2003-2007 states
the need to ``determine how antimicrobial resistance is acquired,
transmitted, maintained, in food-producing animals, and develop
technologies or altered management strategies to control its
occurrence.'' In 1996, the Department of Health and Human Services
(HHS) and the USDA established the National Antimicrobial Resistance
Monitoring System (NARMS) to monitor trends in antimicrobial resistance
in foodborne pathogens; the USDA has expanded monitoring to include the
Collaboration on Animal Health Food Safety Epidemiology (CAHFSE)
program. The USDA support for these projects should continue and the
ASM urges Congress to increase support for antimicrobial resistance
surveillance, research, prevention, and control programs.
Conclusion
The USDA's mission and goals of leadership on food, agriculture,
and natural resources, based on sound public policy, the best available
science, and efficient management should be strongly supported. With a
significant investment in research, the USDA will be better able to
meet its goals. The ASM urges Congress to increase funding for
agricultural research programs to enable the USDA to help ensure a
safe, nutritious and plentiful food supply for America. This includes
providing $247.5 million for the NRI in fiscal year 2007.
The ASM appreciates the opportunity to provide written testimony
and would be pleased to assist the Subcommittee as the Department of
Agriculture bill is considered throughout the appropriations process.
______
Prepared Statement of the American Society for Microbiology
The American Society for Microbiology (ASM) is submitting the
following statement in support of increased funding for the fiscal year
2007 budget of the Food and Drug Administration (FDA). The ASM is the
largest single life science society in the world with over 42,000
members who are involved in basic and applied research and testing in
university, industry, government and clinical laboratories.
The Administration's fiscal year 2007 budget request of $1.95
billion for the FDA includes $1.55 billion in budget authority and $402
million in industry user fees, a total increase of $70.8 million or 3.8
percent over the fiscal year 2006 budget. Despite the proposed
increase, the FDA's budget continues to be constrained, especially in
view of the increasing demands on the FDA related to food safety,
pandemic influenza, new and emerging infectious diseases, such as West
Nile and Mad Cow Disease, drug safety, and initiatives to advance
innovation in medical product development. The ASM recommends that
Congress provide additional funding for the FDA to increase its fiscal
year 2007 proposed budget. Increased support for the FDA will enable
the Agency to enhance programs that protect against unsafe healthcare
products, unhealthy foods, and health challenges from bioterrorism or
natural disasters. The FDA regulates products that account for almost
25 percent of U.S. consumer spending, including 80 percent of our
national food supply and all human drugs, vaccines, medical devices,
tissues for transplantation, equipment that emits radiation, cosmetics,
and animal drugs and feed. Together these products are worth nearly
$1.5 trillion annually and affect the daily lives of people.
Protecting America's Health--Pandemic Preparedness
The specter of a potential influenza pandemic requires increased
resources for preparedness. Recent research has found that viruses
responsible for the three influenza pandemics in the past century
carried genes from avian influenza viruses. In the current H5N1
outbreak, the World Health Organization has confirmed about 186 human
cases although thus far the virus does not spread readily from human to
human. If viral mutations make human-to-human transmission a tragic
reality, however, a deadly pandemic could cause millions of human
deaths and billions in economic costs. The FDA request for fiscal year
2007 asks for $55.3 million for pandemic preparedness, an amount $30.5
million more than the fiscal year 2006 level.
The FDA provides unique support to the recently launched National
Strategy for Pandemic Influenza, a broad, multi-agency effort to better
prepare the United States for any pandemic influenza. This Federal
response targets three primary goals: detect and contain outbreaks
wherever they occur; ensure that Federal, State, and local communities
are prepared; and stockpile vaccines and antiviral drugs through
accelerated development of new vaccine technologies and greatly
increased U.S. production capacity. Last December, when the Department
of Health and Human Services (DHHS) announced its Pandemic Influenza
Plan as part of the Federal strategy, the ASM endorsed its priority of
increased vaccine manufacturing capacity (enough vaccine for all
Americans within 6 months of a domestic outbreak). At present, there
are not nearly enough vaccines and antiviral drugs to meet Federal
goals. The ASM is concerned that adequate funding be given to the FDA,
which will be a central figure in vaccine and antiviral development and
manufacturing. Heightened output using new technologies will further
burden the FDA's product evaluation process, already stretched by
research responses to emerging infectious pathogens like SARS and West
Nile virus.
Scientists at the FDA's Center for Biologics Evaluation and
Research (CBER) and Center for Drug Evaluation and Research (CDER) will
shoulder much of the Agency's growing vaccine and antiviral
contribution towards pandemic preparedness. Researchers from the FDA
and their private-industry partners will tackle the critical issues of
expanding U.S. capacity for traditional egg-based vaccine production,
the technological transition to cell-culture-based vaccine production,
and development of innovative vaccines and therapeutic drugs. Through
the FDA's Critical Path Initiative to get products to market more
quickly, accelerated approval can help expedite the Federal stockpile
of vaccines and antivirals needed to counter pandemic influenza.
The FDA not only assures the safety and efficacy of new products,
but agency personnel also provide technical support to manufacturers
from laboratory to market. In early March, the FDA issued two sets of
draft recommendations to aid manufacturers in developing vaccines, one
for seasonal, one for pandemic influenza. Seasonal influenza is an ever
present threat to American health and with pneumonia, it remains the
leading infectious cause of U.S. deaths. The two guidances also address
some promising higher-output technologies for vaccine production, such
as cell culture and recombinant manufacturing. The scientific advances
from the FDA's influenza activities will undoubtedly heighten
protection against infectious diseases in general, as well as
production of antiviral vaccines and drugs in particular. Efforts by
the influenza preparedness programs also will improve the safety of our
national food supply. Scientists from the FDA are developing new
methods to detect antiviral drug residues in food, while FDA
communications personnel are creating public guidelines on food
preparation in the event that avian influenza reaches poultry flocks in
the United States.
Protecting America's Health--Food Security and Safety
The FDA oversees about 80 percent of the nation's entire food
supply, with only the exception of meat, poultry, and some egg products
regulated by the Department of Agriculture (USDA). Within the FDA, the
Center for Food Safety and Applied Nutrition (CFSAN) and the Office of
Regulatory Affairs are responsible each year for goods worth $417
billion in domestically produced foods and $49 billion in imported
foods. In fiscal year 2007, the agency's Prior Notice Center is
expecting to process daily up to 20,000 notifications of food import
shipments. The FDA's food safety efforts involve reams of regulations,
constant laboratory testing with the latest methods, and field
inspections of producers and handlers from among the 420,000 FDA-
registered food establishments here and abroad. The Administration's
proposed fiscal year 2007 budget requests about $450 million for the
FDA foods program, an increase of $11 million over last fiscal year.
Within this total, $178 million is earmarked for protecting our food
against deliberate attacks, a $20 million increase over fiscal year
2006.
The CFSAN conducts research typically not conducted by industry or
other research agencies, which provides the basis for regulating the
food-producing and processing industries to ensure a safe and
nutritious food supply from farm to table. It provides the scientific
basis for nutrition labeling regulations and guidance, identification
of foodborne pathogens, the development of mitigation and prevention
strategies, as well as identifying and recommending the adoption of
innovative technologies that reduce public health concerns related to
foodborne pathogens. The ASM is concerned with the proposed $5.2
million reduction for the CFSAN in fiscal year 2007, and the
redirection of resources from base programs that includes cuts to the
CFSAN's research program and the loss of 64 full-time employees (FTE).
With the current increasing trends in importation of produce, the FDA
needs to strengthen its role in this area, including better sampling
and real-time microbiological testing procedures, and more inspectors
to provide a greater assurance of public health protection.
Protecting the nation's food supply from bioterrorism is one of the
FDA's priority initiatives for fiscal year 2007, specifically through
improved prevention strategies and plans, advanced screening methods to
detect microbial food contamination, and outreach to industry, State,
and local stakeholders. The FDA's Food Defense Initiative is part of an
interagency strategy involving the Department of Homeland Security, the
USDA, and other government entities. Because of countless possibilities
for intentional and accidental food contamination, the ASM supports the
aggressive measures taken by the FDA to inspect, detect, and prevent
unsafe foods. For example, in fiscal year 2005, the FDA conducted more
than 86,000 import security reviews to identify any imported food and
feed products that might be intentionally contaminated. Much of the
fiscal year 2007 budget increase would expand the FDA's Food Emergency
Response Network (FERN) and the Internet-based data exchange system
used by health labs at all levels, the Electronic Laboratory Exchange
Network (eLEXNET). FERN is a network of Federal and State laboratories
designed to guarantee the analytic surge capacity to respond to any
attack on the U.S. food system. By the end of fiscal year 2006, the
network will incorporate 10 Federal and 10 State labs; the additional
fiscal year 2007 funds will expand the network into 6 more State labs.
Funds also support related basic food defense research and other
surveillance linkages among Federal, State, and local responders.
Although impressive in its quantity, quality and diversity, the
food supply system in the United States nonetheless remains vulnerable
to accidental cases of foodborne infectious diseases. Health officials
report that each year these diseases are responsible for an estimated
76 million illnesses, more than 300,000 hospitalizations, and 5,000
deaths. The USDA has estimated that each year the most common foodborne
pathogens cost the U.S. economy as much as $6 billion through direct
medical costs (acute and chronic cases) and lost productivity. The ASM
commends the FDA regulatory and research programs that address health
risks related to foods, cosmetics, and animal feed and drugs, many of
which involve microbial pathogens. Globalization of our food sources
has diversified American diets, but it also greatly increases the
possibilities for contamination as we eat more fresh produce, once-
unfamiliar foods, and products from less-regulated import sources.
Oversight of the new genetically engineered foods and recent dramatic
growth in the diet supplement industry also stretches limited FDA food
safety resources.
An estimated 118,000 illnesses occur each year in the United States
due to eggs contaminated with Salmonella bacteria (Salmonella caused
infections alone account for $1 billion yearly in direct and indirect
costs). In 2006, the FDA expects to publish its final rule to the
States and the egg industry to prevent Salmonella contamination during
production, with the intent of reducing the annual human cases by at
least 33,500. The agency uses on-going surveillance of U.S. foodborne
disease outbreaks to detect any incidents with products regulated by
the FDA. It also has several emergency response plans to address sudden
threats to food safety, for example, post-Katrina deployment to assess
stored-food sources in the Gulf Coast, and the BSE Emergency Response
Plan to quickly evaluate with the USDA any report of bovine spongiform
encephalopathy in US cattle. For fiscal year 2007, BSE research/
detection will be one of the two highest-priority programs at the FDA's
Center for Veterinary Medicine, along with reduction of antimicrobial
resistance in humans now linked to antibiotics fed to food animals.
Protecting America's Health--Biomedical Frontiers
The new Critical Path to Personalized Medicine will be the FDA's
top scientific policy initiative for at least the next 5 years, created
``to accelerate the field of personalized, predictive, and preemptive
medicine.'' Economic experts predict that by 2015 the United States
will pay out about 20 percent of its gross domestic product on health
spending. The FDA is seeking to more efficiently evaluate pre-market
biomedical products. The critical path initiative is the Agency's
response to recent stagnation in new product development due to
problematic clinical trials or manufacturing procedures that disallow
approval FDA from the FDA. By using cutting-edge molecular biology
technologies, the FDA expects to modernize the medical product
development process with cooperation from private industry. These
technologies also will enable scientists from the FDA to evaluate and
encourage superior therapies personalized or tailored to individual
groups of patients, reducing the time-consuming need to approve
products for broad use and paving the way to less-expensive clinical
trials and more effective drugs. The new molecular-based technologies
also are expected to help predict which patients would benefit from a
particular therapy and which might suffer ill effects. The ASM agrees
with the FDA intent to stimulate private industry use of new
generations of scientific tools, in order to expedite technology
transfer and to help maintain U.S. science-based competitiveness in an
expanding global healthcare market.
Conclusion
The ASM strongly recommends an increased budget for the FDA, which
would benefit its important programs and provided need resources for
priority initiatives.
______
Prepared Statement of the American Society of Plant Biologists (ASPB)
The American Society of Plant Biologists (ASPB), a non-profit
society representing nearly 6,000 plant scientists, urges the
Subcommittee to support the President's fiscal year 2007 budget request
of $247.5 million for the Department of Agriculture National Research
Initiative Competitive Grants Program (NRI). We urge a significant
increase for the Cooperative State Research Education, and Extension
Service (CSREES) and Agricultural Research Service (ARS) over the
fiscal year 2006 appropriation.
Basic plant research supported by USDA-ARS and CSREES, including
the NRI, provides new knowledge that leads to improved and value-added
crops. This enhances economic opportunities for America's farmers. This
in turn benefits rural economies and the quality of life in rural
communities.
As ASPB Committee on Public Affairs Chair Roger Innes, Professor,
Indiana University, noted, NRI-funded research performed by ASPB
members has led to major advances in enhancing and protecting the
safety of the Nation's agriculture and food supply. ASPB members are
also studying how plants accumulate nutrients in order to develop crop
plants with higher nutrient content and are learning how plants utilize
water and soil nutrients (e.g. nitrogen and phosphorous) in an effort
to develop crops that require less fertilizer, which would have major
environmental, economic and health benefits.
Advances in science made possible through the NRI will enable
farmers to reduce their dependency on pesticides and antibiotics and to
protect the water supply, soils and fragile ecosystems, noted ASPB
Committee on Public Affairs Chair Pamela Ronald, Professor, University
of California, Davis.
Research sponsored by the NRI contributes to higher yields and
safer foods. The NRI contributes to the talent pool of agricultural
scientists in the states and Nation to better serve the needs of
producers and consumers. Without grant support from the NRI, the
agricultural research community in our Nation would be severely
weakened, commented ASPB President Michael Thomashow, Professor,
Michigan State University.
Research leading to improved energy crops could boost economies in
rural and urban areas of America while reducing dependence on foreign
oil. USDA and DOE reported in April how more than 33 percent of our
Nation's transportation fuels could be supplied by homegrown biofuels
compared to the current two percent. This would help cut the Nation's
trade deficit, while also reducing carbon emissions. We applaud the
Department of Agriculture for its own and collaborative efforts with
the Department of Energy and National Science Foundation to increase
basic understanding of plants for enhanced production of biofuels.
Advances in plant research that have helped farmers give Americans the
world's lowest cost for food (as the share of personal income) could
also lower fuel costs and stabilize energy supplies.
The majority of ASPB members perform research that addresses
fundamental questions in plant biology. It is this basic research that
leads to unexpected breakthroughs and new approaches to improving crop
production. For example, the discovery of RNA interference arose from
basic research on the control of gene expression and on virus
resistance in plants, but is now revolutionizing research and
applications in both plant and human biology. ASPB urges the
Subcommittee to continue supporting USDA-sponsored world leading basic
plant biology research. New enhanced crops result from research
directly on crops and on simpler model plants with shared traits, such
as Arabidopsis.
Tremendous advancements in our understanding of plant genomes have
been made in the last 5 years. These advancements have greatly
accelerated our ability to identify genes controlling important
agricultural traits such as disease resistance, flowering time, and
drought tolerance. These genomic resources have also greatly enhanced
our abilities to use molecular breeding tools to develop superior crop
varieties, Innes commented.
We have recommended in the past that the NRI increase funding
awarded for individual research grants for both direct and indirect
costs, but not decrease the total number of grants awarded. This
requires substantial additional funding for the NRI program. Due to
overall budget constraints, the NRI budget for existing programs has
not increased at a rate to keep pace with the higher grant award
levels, that are more comparable now to award levels from other
research agencies. As a result, to accomplish an increase in award
sizes, the NRI has had to fund fewer grants. This has caused funding
rates to plummet.
If such low funding rates are maintained, it will cause many
research labs to close and make it difficult for universities to
justify maintaining faculty in these areas. It will also make it very
difficult to attract new students and faculty into plant biology, just
at a time when the opportunities for rapid advancement are
unprecedented. A substantial increase as requested by the President for
the NRI would lead to a higher number of awards in plant biology and
other areas. This will result in more benefits in crop yields, human
health and nutrition, environmental quality, clean energy production
and farming practices.
Continued support for a balanced research portfolio in the
Department including extramural and intramural research is needed to
address the many and sometimes devastating problems farmers face in
growing crops. CSREES and ARS continue to address very effectively many
important research questions for American agriculture.
We deeply appreciate the Subcommittee's support for research
sponsored by the Department of Agriculture. The Subcommittee's support
has been essential to producing and securing the Nation's food supply.
Disclosure statement on Federal grant support
The American Society of Plant Biologists (ASPB) received Federal
grants from USDA-CSREES in the amount of $7,000 in each of fiscal years
2005 and 2006 to help coordinate the USDA-CSREES Plant and Pest Biology
Stakeholders' Workshop and print the subsequent workshop report. Many
associations representing growers of commodity crops; science societies
representing the research community; and officials administering
Federal research programs participated.
______
Prepared Statement of the California Industry and Government Central
California Ozone Study Coalition
Mr. Chairman and Members of the Subcommittee: On behalf of the
California Industry and Government Central California Ozone Study
(CCOS) Coalition, we are pleased to submit this statement for the
record in support of our fiscal year 2007 funding request of $400,000
from the Department of Agriculture for CCOS. These funds are necessary
for the State of California to address the very significant challenges
it faces to comply with new national ambient air quality standards for
ozone and fine particulate matter. The study design incorporates recent
technical recommendations from the National Academy of Sciences (NAS)
on how to most effectively comply with Federal Clean Air Act
requirements.
First, we want to thank you for your past assistance in obtaining
Federal funding for the Central California Ozone Study (CCOS) and
California Regional PM<INF>10</INF>/PM<INF>2.5</INF> Air Quality Study
(CRPAQS). Your support of these studies has been instrumental in
improving the scientific understanding of the nature and cause of ozone
and particulate matter air pollution in Central California and the
Nation. Information gained from these two studies is forming the basis
for the 8-hour ozone, PM<INF>2.5</INF>, and regional haze State
Implementation Plans (SIPs) that are due in 2007 (ozone) and 2008
(particulate matter/haze). As with California's previous SIPs, the
2007-2008 SIPs will need to be updated and refined due to the
scientific complexity of our air pollution problem. Our request this
year would fund the completion of CCOS to address important questions
that won't be answered with results from previously funded research
projects.
To date, our understanding of air pollution and the technical basis
for SIPs has largely been founded on pollutant-specific studies, like
CCOS. These studies are conducted over a single season or single year
and have relied on modeling and analysis of selected days with high
concentrations. Future SIPs will be more complex than they were in the
past. The National Academy of Sciences (NAS) is now recommending a
weight-of-evidence approach that will involve utilizing more broad-
based, integrated methods, such as data analysis in combination with
seasonal and annual photochemical modeling, to assess compliance with
Federal Clean Air Act requirements. This will involve the analysis of a
larger number of days and possibly an entire season. In addition,
because ozone and particulate matter are formed from some of the same
emissions precursors, there is a need to address both pollutants in
combination, which CCOS will do.
Consistent with the new NAS recommendations, the CCOS study
includes corroborative analyses with the extensive data provided by
past studies, advances the state-of-science in air quality modeling,
and addresses the integration of ozone and particulate pollution
studies. In addition, the study will incorporate further refinements to
emission inventories, address the development of observation-based
analyses with sound theoretical bases, and includes the following four
general components:
------------------------------------------------------------------------
------------------------------------------------------------------------
Performing SIP modeling analyses........................ 2005-2011
Conducting weight-of-evidence data analyses............. 2006-2008
Making emission inventory improvements.................. 2006-2010
Performing seasonal and annual modeling................. 2008-2011
------------------------------------------------------------------------
CCOS is directed by Policy and Technical Committees consisting of
representatives from Federal, State, and local governments, as well as
private industry. These committees, which managed the San Joaquin
Valley Ozone Study and are currently managing the California Regional
Particulate Air Quality Study, are landmark examples of collaborative
environmental management. The proven methods and established teamwork
provide a solid foundation for CCOS.
For fiscal year 2007, our Coalition is seeking funding of $400,000
from the Department of Agriculture/CSREES in support of CCOS. Domestic
agriculture is facing increasing international competition. Costs of
production and processing are becoming increasingly more critical. With
the current SJV PM<INF>10</INF> SIP and the upcoming ozone and
PM<INF>2.5</INF> SIPs, the agricultural industry within the study area
is facing many new requirements to manage and reduce their air quality
impacts. The identification of scientifically validated, cost-effective
options for reducing the environmental impacts of on-field and
livestock related air emissions will contribute significantly to the
long-term health and economic stability of local agriculture. Funding
will support livestock and crop-related research that will help
maintain a vital agricultural industry within the state. Research will
be focused to measure baseline emissions, and to study the most
economical and effective approaches for reducing the impacts of
agriculture on air quality. These studies also have nationwide
benefits.
The funding request is for: (1) Study of agricultural VOC emissions
from pesticide application that will help answer questions relevant to
farmers and regulators throughout the Nation, (2) Evaluation of
baseline livestock emissions (VOCs, PM<INF>10</INF>, ammonia) and
effective methods to reduce these emissions, (3) Development of
livestock facility emissions models as recommended by the National
Academy of Sciences and (4) Improvement of emissions estimates for
agricultural related diesel engines, both on-road and off-road. This
includes emission factors, activity data, fleet characteristics,
seasonality of emissions, and benefits of incentive programs to
accelerate the introduction of cleaner engines.
Thank you very much for your consideration of our request.
______
Prepared Statement of the Coalition on Funding Agricultural Research
Missions (CoFARM)
The Coalition on Funding Agricultural Research Missions (CoFARM)
appreciates the opportunity to submit testimony on the fiscal year 2007
appropriation for the United States Department of Agriculture (USDA).
CoFARM is a coalition of 23 professional scientific organizations with
130,000 members dedicated to advancing and sustaining a balanced
investment in our Nation's research portfolio.
The USDA sponsors research and education programs which contribute
to solving agricultural problems of high national priority and ensuring
food availability, nutrition, quality and safety, as well as a
competitive agricultural economy. U.S. agriculture faces new
challenges, including threats from emerging infectious diseases in
plants and animals, climate change, and public concern about food
safety and security. It is critical to increase the visibility and
investment in agriculture research to respond to these challenges and
we appreciate the Subcommittee's efforts to fund the National Research
Initiative at $181 million in fiscal year 2006 and urge the
Subcommittee to support the Administration's fiscal year 2007 request
of $247.5 million for this program.
USDA National Research Initiative Competitive Grants Program
The National Research Initiative Competitive Grants Program (NRI)
was established in 1991 in response to recommendations outlined in
Investing in Research: A Proposal to Strengthen the Agricultural, Food
and Environmental System, a 1989 report by the National Research
Council's (NRC) Board on Agriculture. This publication called for
increased funding of high priority research that is supported by USDA
through a competitive peer-review process directed at:
--Increasing the competitiveness of U.S. agriculture.
--Improving human health and well-being through an abundant, safe,
and high-quality food supply.
--Sustaining the quality and productivity of the natural resources
and the environment upon which agriculture depends.
Continued interest in and support of the NRI is reflected in two
subsequent NRC reports, Investing in the National Research Initiative:
An Update of the Competitive Grants Program of the U.S. Department of
Agriculture, published in 1994, and National Research Initiative: A
Vital Competitive Grants Program in Food, Fiber, and Natural Resources
Research, published in 2000.
Today, the NRI, housed within USDA's Cooperative State Research,
Education, and Extension Service (CSREES), supports research on key
problems of national and regional importance in biological,
environmental, physical, and social sciences relevant to agriculture,
food, and the environment on a peer-reviewed, competitive basis.
Additionally, NRI enables USDA to develop new partnerships with other
Federal agencies that advance agricultural science. Examples of such
collaborations include USDA's involvement in the Microbial Genome
Sequencing Program, the Maize Genome Program, the Microbial
Observatories program, the Plant Feedstock Genomics for Bioenergy
program, the Metabolic Engineering program, and the Climate Change
Science Plan.
CoFARM Urges Congress To Support the Administration's Requested
Increase or NRI in Fiscal Year 2007.--NRI's proposed increase comes
from the shifting of CSREES Integrated Activities, such as food safety,
pest management, and water quality, making up $42.7 million of the
proposed increase, providing a net increase of $24 million for NRI
including the additional responsibility of the Integrated Programs.
CoFARM supports the Administration's effort to increase competitively
awarded funding mechanisms and believes that competitive grants ensure
the best science.
Past investments in agricultural research have yielded many
breakthroughs in American agricultural productivity, including these
few Hatch and NRI funded research success stories:
--Pennsylvania researchers are developing rapid diagnostic tests to
curb avian influenza, a disease that could cripple the state's
$700 million poultry industry.
--University of Maryland researchers have created an advanced machine
vision technology to detect bone fragments and foreign objects
in meat.
--Researchers in Florida have tested a common fern's ability to soak
up arsenic, a cancer-causing heavy metal, from contaminated
soils. The market for plant-based remediation of wastes is
estimated to be $370 million in 2005.
--Entomologists and Nematologists developed a vaccine for the
protection of cattle from the horn fly, a major insect pest in
many parts of the world costing the North American cattle
industry alone more than $1 billion annually.
--As a result of NRI funding, a group of economists found that the
competitive environment of supermarket retailers encourages
patterns of adoption of food products using technologies that
are new to the market.
--Through NRI funded research, scientists developed a new assay that
allows for rapid identification of Clostridium perfringens,
which is associated with common food-borne illness, in hospital
outbreaks and has resulted in improved diagnostic procedures.
--Florida family and youth researchers have shed light on crime and
violence trends in schools and evaluated prevention programs.
The result has been a decline in disruptive behavior in
classrooms by 40 percent over 2 years. The work is a national
model for improving school safety.
Congress must enhance funding for agricultural research to assure
Americans of a safe and nutritious food supply and to provide for the
next generation of research scientists.
CoFARM appreciates the opportunity to provide written testimony and
would be pleased to assist the Subcommittee as the Department of
Agriculture bill is considered throughout the appropriations process.
______
Prepared Statement of the Coalition to Promote U.S. Agricultural
Exports
As members of the Coalition to Promote U.S. Agricultural Exports,
we commend the Chairman and members of the Subcommittee for their
interest and support of U.S. agriculture and express our appreciation
for this opportunity to share our views.
The Coalition to Promote U.S. Agricultural Exports is an ad hoc
coalition of over 100 organizations, representing farmers and ranchers,
fishermen and forest product producers, cooperatives, small businesses,
regional trade organizations, and the State Departments of Agriculture
(see attached). We believe the United States must continue to have in
place policies and programs that help maintain the ability of American
agriculture to compete effectively in a global marketplace still
characterized by highly subsidized foreign competition.
With the 2002 Farm Bill, Congress sought to bolster U.S. trade
expansion efforts by approving an increase in funding for the Market
Access Program (MAP) and the Foreign Market Development (FMD) Program.
This commitment began to reverse the decline in funding for these
important export programs that occurred over the previous decade. For
fiscal year 2007, the Farm Bill authorizes funding for MAP at $200
million, and FMD is authorized at $34.5 million. The Coalition strongly
urges that both programs be funded at the full authorized levels in
order to carry out important market development activities. These are
the same levels of funding included in the fiscal year 2006 Agriculture
Appropriations bill that was signed into law last November.
Farm income and agriculture's economic well-being depend heavily on
exports, which account for over 25 percent of U.S. producers' cash
receipts, provide jobs for nearly one million Americans, and make a
positive contribution to our nation's overall trade balance. In fiscal
year 2006, U.S. agriculture exports are projected to reach $64.5
billion which, if realized, would make it the highest export sales year
ever. However, exports could be significantly higher if it were not for
a combination of factors, including continued high levels of subsidized
foreign competition and related steep artificial trade barriers.
Agricultural imports are also forecast to be a record $63.5 billion,
continuing a 35-year upward trend that has increased at a faster pace
recently. If these projections hold, then agriculture's trade surplus
is only expected to be about $1 billion, a huge decline from the
roughly $27 billion surplus of fiscal year 1996. In fiscal year 1999,
the U.S. recorded its first agricultural trade deficit with the EU of
$1 billion. In fiscal year 2006, USDA forecasts that the trade deficit
with the EU will grow to $6.8 billion, the largest agriculture deficit
the United States runs with any market.
America's agricultural industry is willing to continue doing its
best to offset the alarming trade deficit confronting our country.
However, the support provided by MAP and FMD (both green box programs)
is essential to this effort.
According to USDA, the European Union (EU) spent more than $3.25
billion on agricultural export subsidies in 2003, compared to
approximately $30 million by the United States. In other words, the
United States is being outspent by more than 100 to 1 by the EU alone
with regard to the use of export subsidies.
In recent years, the EU, the Cairns group, and other foreign
competitors also devoted approximately $1.2 billion on various market
development activities to promote their exports of agricultural,
forestry, and fishery products. A significant portion of this is
carried out in the United States. Market promotion is permitted under
World Trade Organization (WTO) rules, with no limit on public or
producer funding, and is not expected to be subject to any disciplines
in the Doha Round negotiations. As a result, it is increasingly seen as
a centerpiece of a winning strategy in the future trade battleground.
Many competitor countries have announced ambitious trade goals and are
shaping export strategies to target promising growth markets and bring
new companies into the export arena. European countries are expanding
their promotional activities in Asia, Latin America, and Eastern
Europe. Canada, Australia, New Zealand, and Brazil have also budgeted
significant investments in export promotion expenditures worldwide in
recent years. As the EU and our other foreign competitors have made
clear, they intend to continue to be aggressive in their export
efforts.
Both MAP and FMD are administered on a cost-share basis with
farmers and other participants required to contribute up to 50 percent
of their own resources. These programs are among the few tools
specifically allowed in unlimited amounts under WTO rules to help
American agriculture and American workers remain competitive in a
global marketplace still characterized by highly subsidized foreign
competition. The over 70 U.S. agricultural groups that share in the
costs of the MAP and FMD programs fully recognize the export benefits
of market development activities. Since 1992, MAP participants have
increased their contributions from 30 percent (30 cents for every
dollar contributed by USDA) to 166 percent ($1.66 in industry funds for
every USDA dollar). For FMD, the contribution rate has risen from 76
percent to the current level of 139 percent. By any measure, such
programs have been tremendously successful and extremely cost-effective
in helping maintain and expand U.S. agricultural exports, protect
American jobs, and strengthen farm income.
Competing in the agricultural export market carries new challenges
and opportunities for U.S. agriculture. Not only is the competition
becoming more intense with increased funding being brought to bear, but
we also face a world where new trade agreements are being developed
almost daily. The United States is also negotiating trade agreements
with the goal of opening new market opportunities for U.S. agriculture.
In addition, the opening of the Iraq market and the markets of other
previously sanctioned countries will offer further opportunities and
challenges.
For all these reasons, we want to emphasize again the need to
strengthen the ability of U.S. agriculture to compete effectively in
the global marketplace. American agriculture is among the most
competitive industries in the world, but it cannot and should not be
expected to compete alone in export markets against the treasuries of
foreign governments. As a Nation, we can work to export our products,
or we can export our jobs. Eliminating or reducing funding for MAP and
FMD in the face of continued subsidized foreign competition, and during
ongoing Doha Round trade negotiations, would put American farmers and
workers at a substantial competitive disadvantage and would be nothing
short of unilateral disarmament. USDA's export programs, such as MAP
and FMD, are a key part of an overall trade strategy that is pro-
growth, pro-trade and pro-job.
Again, as members of the Coalition to Promote U.S. Agricultural
Exports, we appreciate very much this opportunity to share our views
and we ask that this statement be included in the official hearing
record.
______
Prepared Statement of the Colorado River Basin Salinity Control Forum
The Congress concluded that the Colorado River Basin Salinity
Control Program (Program) should be implemented in the most cost-
effective way. Realizing that agricultural on-farm strategies were some
of the most cost-effective strategies, the Congress authorized a
program for the United States Department of Agriculture (USDA) through
amendment of the Colorado River Basin Salinity Control Act in 1984.
With the enactment of the Federal Agriculture Improvement and Reform
Act of 1996 (FAIRA), the Congress directed that the Program should
continue to be implemented as one of the components of the
Environmental Quality Incentives Program (EQIP). Since the enactment of
the Farm Security and Rural Investment Act (FSRIA) in 2002, there have
been, for the first time in a number of years, opportunities to
adequately fund the Program within the EQIP.
The Program, as set forth in the Colorado River Basin Salinity
Control Act, is to benefit Lower Basin water users hundreds of miles
downstream from salt sources in the Upper Basin as the salinity of
Colorado River water increases as the water flows downstream. There are
very significant economic damages caused by high salt levels in this
water source. Agriculturalists in the Upper Basin where the salt must
be controlled, however, don't first look to downstream water quality
standards but look for local benefits. These local benefits are in the
form of enhanced beneficial use and improved crop yields. They submit
cost-effective proposals to the State Conservationists in Utah, Wyoming
and Colorado and offer to cost share in the acquisition of new
irrigation equipment. The Colorado River Basin Salinity Control Act
provides that the seven Colorado River Basin States will also cost
share with the Federal funds for this effort. This has brought together
a remarkable partnership.
After longstanding urgings from the States and directives from the
Congress, the USDA has concluded that this program is different than
small watershed enhancement efforts common to the EQIP. In this case,
the watershed to be considered stretches more than 1,200 miles from the
river's headwater in the Rocky Mountains to the river's terminus in the
Gulf of California in Mexico and receives water from numerous
tributaries. The USDA has determined that this effort should receive a
special funding designation and has appointed a coordinator for this
multi-state effort.
In recent fiscal years, the Natural Resources Conservation Service
(NRCS) has directed that over $19 million be used for the Program. The
Forum appreciates the efforts of the NRCS leadership and the support of
this subcommittee. The plan for water quality control of the Colorado
River was prepared by the Colorado River Basin Salinity Control Forum
(Forum), adopted by the States, and approved by the United States
Environmental Protection Agency (EPA). The Colorado River Basin
Salinity Control Advisory Council has taken the position that the
funding for the salinity control program should not be below $20
million per year. Over the last 3 fiscal years, for the first time,
funding almost reached the needed level. State and local cost-sharing
is triggered by the Federal appropriation. In fiscal year 2006, it is
anticipated that the States will cost share with about $8.3 million and
local agriculture producers will add another $7.5 million. Hence, it is
anticipated that in fiscal year 2005 the State and local contributions
will be 45 percent of the total program cost.
Over the past few years, the NRCS has designated that about 2.5
percent of the EQIP funds be allocated to the Colorado River salinity
control program. The Forum believes this is the appropriate future
level of funding as long as the total EQIP funding nationwide is around
$1 billion. Funding above this level assists in offsetting pre-fiscal
year 2003 funding below this level. The Basin States have cost sharing
dollars available to participate in funding on-farm salinity control
efforts. The agricultural producers in the Upper Basin are waiting for
their applications to be considered so that they might improve their
irrigation equipment and also cost share in the Program.
OVERVIEW
The Program was authorized by the Congress in 1974. The Title I
portion of the Colorado River Basin Salinity Control Act responded to
commitments that the United States made, through a Minute of the
International Boundary and Water Commission, to Mexico specific to the
quality of water being delivered to Mexico below Imperial Dam. Title II
of the Act established a program to respond to salinity control needs
of Colorado River water users in the United States and to comply with
the mandates of the then newly-enacted Clean Water Act. This testimony
is in support of funding for the Title II program.
After a decade of investigative and implementation efforts, the
Basin States concluded that the Salinity Control Act needed to be
amended. The Congress agreed and revised the Act in 1984. That
revision, while keeping the Department of the Interior as lead
coordinator for Colorado River Basin salinity control efforts, also
gave new salinity control responsibilities to the USDA. The Congress
has charged the Administration with implementing the most cost-
effective program practicable (measured in dollars per ton of salt
controlled). It has been determined that the agricultural efforts are
some of the most cost-effective opportunities.
Since Congressional mandates of nearly 3 decades ago, much has been
learned about the impact of salts in the Colorado River system. The
Bureau of Reclamation (Reclamation) has conducted studies on the
economic impact of these salts. Reclamation recognizes that the damages
to United States' water users alone are hundreds of millions of dollars
per year.
The Forum is composed of gubernatorial appointees from Arizona,
California, Colorado, Nevada, New Mexico, Utah and Wyoming. The Forum
has become the seven-state coordinating body for interfacing with
Federal agencies and the Congress in support of the implementation of
the Salinity Control Program. In close cooperation with the EPA and
pursuant to requirements of the Clean Water Act, every 3 years the
Forum prepares a formal report evaluating the salinity of the Colorado
River, its anticipated future salinity, and the program elements
necessary to keep the salinity concentrations (measured in Total
Dissolved Solids--TDS) at or below the levels measured in the river
system in 1972 at Imperial Dam, and below Parker and Hoover Dams.
In setting water quality standards for the Colorado River system,
the salinity concentrations at these three locations in 1972 have been
identified as the numeric criteria. The plan necessary for controlling
salinity and reducing downstream damages has been captioned the ``Plan
of Implementation.'' The 2005 Review of water quality standards
includes an updated Plan of Implementation. In order to eliminate the
shortfall in salinity control resulting from inadequate Federal funding
for a number of years from the USDA, the Forum has determined that
implementation of the Program needs to be accelerated. The level of
appropriation requested in this testimony is in keeping with the agreed
upon plan. If adequate funds are not appropriated, significant damages
from the higher salt concentrations in the water will be more
widespread in the United States and Mexico.
Concentrations of salts in the river cause $330 million in
quantified damages and significantly more in unquantified damages in
the United States and result in poorer quality water being delivered by
the United States to Mexico. Damages occur from:
--a reduction in the yield of salt sensitive crops and increased
water use for leaching in the agricultural sector,
--a reduction in the useful life of galvanized water pipe systems,
water heaters, faucets, garbage disposals, clothes washers, and
dishwashers, and increased use of bottled water and water
softeners in the household sector,
--an increase in the use of water for cooling, and the cost of water
softening, and a decrease in equipment service life in the
commercial sector,
--an increase in the use of water and the cost of water treatment,
and an increase in sewer fees in the industrial sector,
--a decrease in the life of treatment facilities and pipelines in the
utility sector,
--difficulty in meeting wastewater discharge requirements to comply
with National Pollutant Discharge Elimination System permit
terms and conditions, and an increase in desalination and brine
disposal costs due to accumulation of salts in groundwater
basins, and
--increased use of imported water for leaching and cost of
desalination and brine disposal for recycled water.
For every 30 mg/L increase in salinity concentrations, there is $75
million in additional damages in the United States. The Forum,
therefore, believes implementation of the USDA program needs to be
funded at 2.5 percent of the total EQIP funding.
Although the Program thus far has been able to implement salinity
control measures that comply with the approved plan, recent drought
years have caused salinity levels to rise in the river. Predictions are
that this will be the trend for the next several years. This places an
added urgency for acceleration of the implementation of the Program.
STATE COST-SHARING AND TECHNICAL ASSISTANCE
The authorized cost sharing by the Basin States, as provided by
FAIRA, was at first difficult to implement as attorneys for the USDA
concluded that the Basin States were authorized to cost share in the
effort, but the Congress had not given the USDA authority to receive
the Basin States' funds. After almost a year of exploring every
possible solution as to how the cost sharing was to occur, the States,
in agreement with Reclamation, State officials in Utah, Colorado and
Wyoming and with NRCS State Conservationists in Utah, Colorado and
Wyoming, agreed upon a program parallel to the salinity control
activities provided by the EQIP wherein the States' cost sharing funds
are being contributed and used. We are now several years into that
program and, at this moment in time, this solution to how cost sharing
can be implemented appears to be satisfactory.
With respect to the States' cost sharing funds, the Basin States
felt that it was most essential that a portion of the Program be
associated with technical assistance and education activities in the
field. Without this necessary support, there is no advanced planning,
proposals are not well prepared, assertions in the proposals cannot be
verified, implementation of contracts cannot be observed, and valuable
partnering and education efforts cannot occur. Recognizing these
values, the ``parallel'' State cost sharing program expends 40 percent
of the funds available on these needed support activities made possible
by contracts with the NRCS. Initially, it was acknowledged that the
Federal portion of the Program funded through EQIP was starved with
respect to needed technical assistance and education support. The Forum
is encouraged with a recent Administration acknowledgment that
technical assistance must be better funded.
______
Prepared Statement of the Council on Food, Agricultural, & Resource
Economics (C-FARE) and the Consortium of Social Science Associations
(COSSA)
Dear Chairman Bennett, Ranking Member Kohl and Members of the
Subcommittee: The Council on Food, Agricultural, and Resource Economics
(C-FARE) and the Consortium of Social Science Associations (COSSA)
appreciate the opportunity to submit testimony on the fiscal year 2007
appropriation for the United States Department of Agriculture. C-FARE
is a non-profit, non-partisan organization dedicated to strengthening
the presence of the agricultural, natural resources, and applied
economics profession to matters of science policy and Federal budget
determination, and we represent approximately 3,500 economists
nationwide. COSSA is an advocacy organization for the social and
behavioral sciences supported by more than 100 professional
associations, scientific societies, universities, and research
institutes.
Our organizations understand the challenges the Senate Agriculture
Appropriations Subcommittee faces given the tight fiscal year 2007
agriculture budget. We also recognize that the Agriculture
Appropriations bill has many valuable and necessary components, and we
applaud the efforts of the Subcommittee to fund mission-critical
research. Below are listed recommendations for the fiscal year 2007
appropriations cycle.
USDA COOPERATIVE STATE RESEARCH, EDUCATION, AND EXTENSION SERVICE
(CSREES)
National Research Initiative
C-FARE and COSSA endorse funding for the National Research
Initiative Competitive Grants Program (NRI) at the President's proposed
level of $247.5 million. The NRI encourages high quality research that
is conducted through a peer reviewed format. In particular, the
research issues addressed by Markets and Trade and Rural Development
are diverse and multi-faceted. Social Science research also enhances
ideas and technologies from other fields of science and research which
adds value to their role in the NRI.
C-FARE and COSSA requests that any new monies appropriated for the
NRI, as requested by the administration, allow the Secretary the
discretion to apply up to 30 percent towards carrying out the NRI
integrated research, extension and education competitive grants
program.
Our organizations applaud the administration's proposal to
eliminate the indirect cost cap on the NRI, set at 20 percent for
fiscal year 2005, which will broaden its appeal by putting the NRI on
equal footing with other Federal competitive grants programs.
Social Science research is highly valued by USDA and much of what
our scientists offer can help meet the strategic goals of CSREES. For
example, social science research meets CSREES strategic goal number 1,
``Enhance Economic Opportunities for Agricultural Producers'' by
providing science-based information, knowledge, and education to help
farmers and ranchers understand risk management, and the long-term
impacts of trade barriers. Research by our members also meets CSREES
goal number 2, ``Support Increased Economic Opportunities and Improved
Quality of Life in Rural America,'' by providing information to help
inform decisions affecting the quality of life in rural America.
Therefore, we request that the Committee encourage CSREES to fund the
social science research components of the NRI at a level sufficient to
allowing scientists to address these unmet research needs. Within the
last year, USDA changed funding for these core congressionally-mandated
programs to every other year, rather than on a yearly basis.
Formula Funding.--Cuts to and proposed elimination of CSREES'
formula-funded research programs can be detrimental to the entire USDA
research portfolio. Formula Funds support the continuing costs of
research activities while providing for long-term commitments to
research that is often essential. Because of their timing and potential
regional and intra-state impacts, much of the infrastructure needed to
conduct competitively award research would be compromised if formula
funds were cut. This would mean a huge and potentially damaging loss of
research data nationwide. A balance of funding mechanisms, including
competitive awards and formula funding, is essential if the capacity of
the United States to conduct agricultural research, both basic and
applied, is to be maintained and the country is to continue to excel in
areas such as agricultural production and expanding the quality of
rural life.
USDA Economic Research Service (ERS)
C-FARE and COSSA support the President's proposed fiscal year 2007
funding level for the Economic Research Service (ERS) initiatives. The
President's budget includes $5.0 million towards the Agricultural and
Rural Development Information System (ARDIS) to help ERS establish and
maintain data collection on the demographic, economic, government
program participation, and other household well-being information from
samples of non-farm rural households and rural-based farm households,
over time. The scientists our organizations represent need exactly such
new and valuable data for a variety of purposes, including estimating
impacts of farm policy changes. Simultaneously collecting the same data
and information from panels of farm and non-farm households in the same
rural area makes it possible to determine just how farm and non-farm
rural households are different from or similar to one another, and
provides a far more definitive than currently available basis for
judging whether and to what extent farm policy changes spill over into
the rural economy. We urge full funding of this initiative to assure
that agricultural and rural economic analysts can reap the minimum
necessary value added that will, in turn, enhance their contributions
to a sound farm policy and robust rural economies throughout the
Nation. We also support the President's proposal of $1.6 million for
the ERS Consumer Data and Information System at ERS. The funding will
include a comprehensive food data system that will be used to obtain
food away from home information. C-FARE and COSSA believe funding this
program is an important contribution to the government wide effort to
fight obesity.
USDA National Agricultural Statistics Service (NASS)
C-FARE and COSSA recommend supporting the President's priority
activities for NASS. These include a net increase of $14 million for
funding for agricultural estimates, Census of Agriculture, and pay
costs. Of the proposed increase, it is necessary to support $3.9
million for Agricultural Estimates Restoration and Modernization. This
initiative will continue NASS' efforts to restore quality and
modernization of the basic USDA agricultural estimates program that
supports the U.S. agricultural market system. The increase will also
include $7.3 million for the 2007 Census of Agriculture. The census
data are relied upon to measure trends and new developments in the
agricultural sector.
USDA Agriculture Marketing Service (AMS)
C-FARE and COSSA encourage Congress to continue supporting USDA's
AMS at a level that will allow them to continue offering the high value
programs they provide. As economists and social scientists we
appreciate that the AMS programs promote a competitive and efficient
marketplace. AMS services such as standardization, grading, market
news, commodity procurement, and other market-facilitating activities
benefit both consumers and producers. For the research community
specifically, AMS market news services provide in-depth data regarding
a wide range of commodities and modes of transportation; such basic
information is invaluable for analysis. AMS also supports research on
marketing and transportation issues through cooperative agreements and
through the Federal-State Marketing Improvement Program.
USDA Grain Inspection, Packers, and Stockyards Administration (GIPSA)
C-FARE and COSSA also value the vital work of GIPSA to help USDA
enhance economic opportunities for agricultural producers by promoting
fair and competitive trade practices and financial integrity in the
grain, livestock, meat and poultry industries. GIPSA reports provide
information that aid in the development of industry standards and
policy decision-making. Several of these reports are used in the
research conducted by social scientists. In particular, the Packers and
Stockyards Statistical Report provides researchers with data on
industry concentration, plant size, and other industry economic
information. The data helps social science researchers study important
social and economic issues, including concentration in the meat packing
industry. We encourage Congress to continue providing appropriate
support for GIPSA and their important programs.
USDA Natural Resources Conservation Service (NRCS)
Our organizations also support sustained investment in our Nation's
natural resources and environment. We applaud USDA NRCS for promoting
conservation and sustainable use of natural resources on the Nation's
private lands. NRCS helps provide science-based knowledge to improve
the management of forests, rangelands, soil, air and water resources.
Social science researchers use this vital information to develop policy
recommendations that impact the future of our agricultural sector, as
well as life in rural America.
Conclusion
Recent security threats facing America require new and expanded
agricultural research to protect our Nation's forests, water supplies,
food processing and distribution network, and rural communities and
insure the future security, safety and sustainability of America's food
and fiber system. In order to address these challenges and maintain our
position in an increasingly competitive world, we must continue to
support research programs such as the NRI and formula funding, and
information systems such as those provided by ERS.
Thank you for the opportunity to present our recommendations. As
you know, past investments in agricultural research have yielded many
breakthroughs in American agricultural productivity. If you have any
questions or concerns regarding our priorities please do not hesitate
to contact us.
C-FARE DISCLOSURE OF GOVERNMENT CONTRACTS AND GRANTS 2004-2006
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Agency Year Background
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USDA CSREES......................... 2005 $10,000 to help support C-FARE's Educational Outreach
Activities by funding a 2004 conference on ``Partnering for
Agricultural Research.'' The conference invited in scientists
from universities, government and private sector to discuss
ways to partner for enhanced research.
USDA ERS............................ 2004 $25,000 to help support C-FARE's Educational Outreach
Activities by funding a 2004 conference on ``Partnering for
Agricultural Research.'' The conference invited in scientists
from universities, government and private sector to discuss
ways to partner for enhanced research. Other portions of the
funding were dedicated to other education activities with
academic scientists.
USDA ERS............................ 2005 $25,000 to help support C-FARE's Educational Outreach
Activities by helping provide funding for C-FARE's intern
briefings, and other educational seminars.
USDA NASS........................... 2004 $7,500 to help support C-FARE's Educational Outreach Activities
by funding a 2004 conference on ``Partnering for Agricultural
Research.'' The conference invited in scientists from
universities, government and private sector to discuss ways to
partner for enhanced research.
USDA NASS........................... 2005 $7,500 in funding helped provide educational seminars to
college students about careers in Washington, DC and other
educational seminars
EPA................................. 2004 $5,000 to help support a 2003 conference on how to use various
database systems.
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______
Prepared Statement of Defenders of Wildlife
On behalf of our members and supporters, Defenders of Wildlife
appreciates the opportunity to comment upon the fiscal year 2007 budget
for the U.S. Department of Agriculture. Defenders of Wildlife is a
national nonprofit conservation organization committed to preserving
the integrity and diversity of natural ecosystems, preventing the
decline of native species, and restoration of threatened habitats and
wildlife populations.
Defenders of Wildlife has concerns about the administration's
fiscal year 2007 budget and we strongly oppose a number of changes the
Bush Administration's proposed fiscal year 2007 budget would make to
Farm Bill conservation programs. While we applaud the administration's
recommendations to fully fund the Wetlands Reserve Program, the Bush
Administration's proposal continues to attempt to rewrite the Farm Bill
to the great detriment of the suite of USDA voluntary conservation
programs. We make recommendations in the following priority areas. 2002
Farm Bill Conservation Title Programs
Resource conservation programs within the Farm Security and Rural
Investment Act of 2002 (Public Law 107-171) (Farm Bill) provide an
integrated approach, through incentives and technical assistance, to
both production and stewardship of farm and ranch lands and the
environment. Further, these programs have been particularly valuable in
providing resources for addressing threatened and endangered species
conservation issues. The 2002 Farm Bill tried to achieve a balance
between farm commodity provisions and critical conservation, nutrition,
research and rural development programs that reach far more Americans
than the traditional commodity programs. But, in every year since the
passage of the Farm Bill, conservation programs continue to be funded
well under authorized levels. This comes at the expense of meaningful
benefits to both sustainable farmers and ranchers and the environment.
The conservation title specifically has bourn the brunt of the cuts.
Since the passage of the 2002 farm bill, congressional and
administrative actions have shortchanged promised conservation title
funding for programs administered by the National Resource Conservation
Service (NRCS) by $1.444 billion over fiscal year 2003 through fiscal
year 2006. The President's proposed budget for 2007 unfortunately
continues this trend. We are pleased that the President's budget this
year again contains a promising proposal to limit environmentally
harmful agricultural commodity subsidies by capping payments at
$250,000 per farmer, and for the first time since he came to office, a
request to fully fund the Wetlands Reserve Program. Unfortunately, his
request still cuts critical conservation programs not just from the
mandated Farm Bill funding, but actually below even the fiscal year
2006 level.
Thus, Defenders of Wildlife urges Congress to restore balance to
the Farm Bill and to not shortchange progressive voluntary conservation
programs. National Farm Bill legislation has a profound impact on
native species and wildlife habitat conservation choices of individual
private landowners who practice crop, livestock, and forestry
activities. Almost 60 percent of at risk species (as defined by The
Nature Conservancy) are on private or state lands. Nearly 40 percent of
plant and animal species listed as threatened or endangered are found
only on private or state lands. Seventy percent of the land in the
United States is held in private ownership in the form of range,
forestry, or agricultural use. As of 1995, nearly 84 percent of the
plants and animals listed as endangered or threatened were listed in
part due to agricultural activities. Specifically, we urge Congress to
restore balance by protecting funding allocations for the following
programs
The Conservation Security Program
The Bush Administration's proposed fiscal year 2007 budget
continues to cripple the landmark Conservation Security Program (CSP).
CSP is an innovative and important initiative that is meant to support
farmers and ranchers who implement and maintain effective stewardship
practices on their working farm and ranch lands. However, every year
since passage it has been a target for cuts thus limiting its ability
to be implemented as intended. Furthermore, the baseline for CSP was
dramatically slashed by $1 billion in the fiscal year 2006 budget
reconciliation. Yet, the administration's fiscal year 2007 budget cuts
CSP by a further 8 percent. As originally enacted, CSP should have
received $846 million in 2007, compared to the $342 million requested
in the President's 2007 budget.
The President's fiscal year 2007 budget reduces the CSP
substantially below the original and intended level authorized in the
Farm Bill, but with the reduced baseline it amounts to an 8 percent
decrease. Moreover, because a significant portion of fiscal year 2006
funding will go to fund the continuation of contracts signed in 2004
and 2005, the proposed funding level will severely curtail the number
of watersheds where the program can be offered to well below the intent
of the 2002 Farm Bill. Current funding levels have permitted enrollment
of only about 10 percent of the Nation's watersheds in the first 2
years of program implementation. In the spring of 2006 the CSP sign-up
was cut in half because there was not enough money. Many farmers who
had been told that their watershed would be funded under CSP were
suddenly told there was no money. This inconsistency turns away many
good stewards of the land.
The Conservation Security Program offers long term benefits for
continued management of lands to promote environmental health. CSP is
structured to reward farmers who have already invested in environmental
stewardship, and to encourage them to go even farther to implement
stewardship practices on their working lands through the enhancement
payment structure. CSP is an essential part of the USDA portfolio of
conservation programs to protect our water, soil, and wildlife
resources. In order to achieve its promise of continuous income support
to all of the country's best stewards, the program must be available to
all producers nationwide, and must be implemented on a schedule that
permits farmers to re-enroll when their contracts are up. Thus
Defenders urges Congress to consider the benefits that these programs
can provide to sustainable farmers in all types of agriculture and in
all regions of the country, and appropriate at authorized levels. At
this point, perpetual cuts have the effect of rewriting the Farm Bill
and changing CSP from the first-ever working lands conservation
entitlement program envisioned by Congress, to a program with limited
enrollment, preferential bidding, and waiting lists.
The Wildlife Habitat Incentives Program
In the President's fiscal year 2007 budget the Wildlife Habitat
Incentives Program (WHIP) gets slashed by 35 percent--$30 million less
then fiscal year 2007 authorized level mandated in the 2002 Farm Bill
and $5 million less then the administration requested last year. WHIP
provides cost sharing and technical assistance for the development of
wildlife habitat on private lands. Though small in size, the program
provides significant benefits for wildlife and wildlife habitat and
provides proactive solutions to dealing with endangered habitat and
species issues before they become critical. More than 8,400 projects
affecting some 1.4 million acres have been approved under WHIP through
fiscal year 2004 (source: http://www.nrcs.usda.gov/programs/farmbill/
2002/pdf/WHIPFct.pdf, fiscal year 2005 data still unavailable) There is
demand for more as backlog statistics from NRCS show us: nationwide,
according to figures through fiscal year 2004 (fiscal year 2005 data
unavailable), over 3,000 qualified applicants were turned away. The
value of the backlogged applications that could be going to these
stewards totals $10 million.
Defenders urges Congress to restore full funding to this program
and protect the allocation of this program to continue to provide
meaningful benefits to sustainable farmers and ranchers and to
wildlife.
Other Important Conservation Programs in the Farm Bill
Several other critical programs, that are part of the forward
thinking conservation initiatives in the Farm Bill, will also be
significantly cut, which in turn will undermine progressive efforts by
farmers and ranchers to steward land, conserve soil and water, and
provide habitat for wildlife. The Environmental Quality Incentives
Program (EQIP), which provides technical assistance, cost-share/
incentive funding to assist crop and livestock producers with
environmental and conservation improvements on their farms and ranches,
is cut by 21 percent--and is $17 million below 2006 funding levels. And
the Farm and Ranch Land Protection Program (FRPP), which keeps working
farms and ranches in production and puts cash in the pockets of farmers
and ranchers, is slashed by a whopping 48 percent--$23.5 million below
the fiscal year 2006 level. Defenders again urges Congress to protect
the restore funding and protect the allocation for these programs, as
well as the Conservation Reserve program. Farm Bill conservation
programs should be appropriated at authorized levels as intended by the
2002 Farm Bill. Overall, the President's request cuts 21 percent of the
Farm Bill's mandatory fiscal year 2007 funding for NRCS programs.
This pattern has real consequences both for environmental quality
and for the farmers and ranchers who need assistance. In 2004 alone,
nearly 152,000 qualified applications for farm conservation programs
had to be turned away--an astonishing unmet conservation need of almost
$4.5 billion! Defenders again urges Congress to protect the restore
funding and protect the allocation for these programs.
Farm Bill Energy Title Programs
Inclusion of an Energy Title in the 2002 Farm Bill was a huge
bipartisan victory for renewable energy and for rural America. However,
the program was allocated $23 million per year in mandatory funding for
fiscal years 2003-2007. The President's fiscal year 20067 budget
request provides only $10 million in discretionary funding. This title
provides programs to spur the growth of renewable energy within the
agriculture sector, an immense potential energy source. Sec. 9006 is
the only provision specific to renewable energy project development
within the Farm Bill. It provides grants, and eventually loans and loan
guarantees, to farmers, ranchers, and rural small businesses for the
development of renewable energy projects and energy efficiency
improvements. The program is designed to help farmers develop much
needed new income streams from renewable energy generation, including
wind, biomass, geothermal, hydrogen and solar energy, as well as
helping to meet the Nation's critical energy needs in an
environmentally sustainable way, and generate economic development in
every region of the country. Defenders urges Congress to restore full
funding to the Renewable energy program as mandated by the Farm Bill.
USDA Invasive Species Prevention and Rapid Response
Defenders of Wildlife is pleased that the President's budget for
fiscal year 2007 includes a $28 million increase over 2006 for the
Animal and Plant Health and Inspection Service's Pest and Disease
exclusion program (page 83). Many of the pests, weeds, and diseases
that threaten livestock, crops and rangelands area are also problematic
for wildlife and wildlife habitats, and exclusion of these pests is the
safest and most cost-effective way to prevent these impacts.
Unfortunately, this foresightedness does not appear to extend to other
areas of the Agriculture budget. For instance: while the Agriculture
Research Service budget text promises ``increased emphasis'' on
diseases, crop pests and invasive species, many of the line items
related to these functions have been substantially decreased from 2006
levels: Food safety by $9 million, Livestock Protection by $7 million,
Crop Protection by $32 million, and Environmental Stewardship by $51
million (page 74-75). We note that the Homeland Security line item
receives a $45 million increase; however, the vast majority of damaging
organisms that have entered the United States have arrived
accidentally, or were deliberately imported for perceived benefit, not
through malicious intent. The Forest Service's Research and Development
program also promises ``increased funding'' for ``invasive species
research vital to a rapid management response'' but overall funding for
Forest and Rangeland Research is decreased by $56 million (pages 181-
182). Furthermore, State and Private Forestry programs, which provide
technical and financial assistance to states for invasive species
issues that impact forest health, is also cut by $39 million from 2006
levels (page 182).
Given the serious economic and ecological problems associated with
invasive species, which are particularly prevalent in agriculture,
rangelands and forests, we urge Congress to fund all of these programs
at their 2006 levels or higher.
Animal and Plant Health and Inspection Service and Wildlife Services
Livestock Protection
The Wildlife Services (WS) program, housed under the Animal and
Plant Health and Inspection Service (APHIS), continues to spend a
disproportionate amount of its annual allocation for livestock
protection activities, which translates generally into the killing of
predators primarily on behalf of sheep and cattle producers. But
according to a recent study by the Wildlife Conservation Society (WCS),
decades of U.S. government-subsidized predator control has failed to
prevent a long-term decline in the sheep industry. The study says that
more than 80 years of federally subsidized predator control with a
total investment of more than $1.6 billion have not been able to stave
off an 85 percent decline in the sheep industry since its peak of 56.2
million animals in 1942.
According to the study, predation by coyotes is often cited as the
primary cause of the decline. However, 80 years of historical data
reveal that a variety of market trends ranging from fluctuating hay
prices and rising wages for livestock workers, to the drop in wholesale
prices of lamb and wool, are the real culprits behind the industry's
drop-off. According to the study's author, ``If predation losses are
responsible for the decline in the U.S. sheep industry and Federal
predator control has been effective at reducing these losses, then we'd
expect to see a strong, positive relationship between efforts to
control predators and trends in sheep numbers and that is just not the
case.'' While predation is not the industry's primary threat, it is one
of the few factors over which ranchers feel they have some degree of
control. In fiscal year 2004 alone, Federal agents killed more than
80,000 mammalian carnivores, including 75,674 coyotes, 359 mountain
lions and 397 black bears. The study suggests that Federal funding for
predator control in the sheep industry should be re-evaluated given the
program's failure to prevent the industry's decline. We support such a
reevaluation and urge the Committee to direct Wildlife Services to
modernize its livestock protection program to focus on assisting
ranchers by providing them with a range of more effective means of
reducing predation, many of which have been developed by the program's
research facility, the National Wildlife Research Center, rather than
concentrating on killing predators. Specifically, Defenders is
concerned with the consistent lack of attention paid to repeated
Congressional directives to the Wildlife Services program that deal
with modernizing the field activities of its staff. Defenders
recommends that Congress ask for a report on Wildlife Services'
documenting its compliance with the directives dealing with the
increased use of non-lethal methods. Defenders of Wildlife requests
also that the Committee's report include the following language: ``The
Committee expects that Wildlife Services will make use of the non-
lethal methods developed by the National Wildlife Research Center and
will make non-lethal controls as the method of choice and resort to
lethal means only as a last resort.''
Defenders of Wildlife appreciates this opportunity to provide
testimony on the fiscal year 2007 USDA budget. Thank you for your
consideration of these comments.
______
Prepared Statement of the Duchesne County Water Conservancy District
The Duchesne County Water Conservancy District is requesting your
support for continued funding for the Colorado River Salinity Control
Title II Program. This program has greatly assisted in removal of many
tons of salt from the Colorado River, but there is still a great deal
of work to be completed that will require an adequate level of funding.
The seven Colorado River Basin States, as well as Mexico, have greatly
benefitted from this important program. For many years high
concentrations of salt in the Colorado River had severely damaged
agricultural production in the West as well as resulting in poor
quality water being delivered to Mexico.
Great strides have been made in improving water quality in the
Colorado River since the inception of this program but we strongly feel
that there is still a great deal to be done. We understand that the
Colorado River Basin Salinity Control Forum is requesting $17,500,000
in funds be appropriated for this program for fiscal year 2007 and we
would like to add our full support to that funding level request. We
would also like to express support for the continued funding of the
Natural Resource Conservation Service program, the Environmental
Quality Incentive Program (EQIP) which works closely with the Salinity
Program. It is very important that adequate funding levels be
maintained for it also.
We request the Subcommittee's assistance to ensure that the
Colorado River Salinity Control Title II program and EQIP program are
provided with continued adequate funding.
______
Prepared Statement of Florida State University
Mr. Chairman, I would like to thank you and the Members of the
Subcommittee for this opportunity to present testimony before this
Committee. I would like to take a moment to briefly acquaint you with
Florida State University.
Located in Tallahassee, Florida's capitol, FSU is a comprehensive
Research I university with a rapidly growing research base. The
University serves as a center for advanced graduate and professional
studies, exemplary research, and top-quality undergraduate programs.
Faculty members at FSU maintain a strong commitment to quality in
teaching, to performance of research and creative activities, and have
a strong commitment to public service. Among the current or former
faculty are numerous recipients of national and international honors
including Nobel laureates, Pulitzer Prize winners, and several members
of the National Academy of Sciences. Our scientists and engineers do
excellent research, have strong interdisciplinary interests, and often
work closely with industrial partners in the commercialization of the
results of their research. Florida State University had over $182
million this past year in research awards.
Florida State University attracts students from every state in the
nation and more than 100 foreign countries. The University is committed
to high admission standards that ensure quality in its student body,
which currently includes National Merit and National Achievement
Scholars, as well as students with superior creative talent. We
consistently rank in the top 25 among U.S. colleges and universities in
attracting National Merit Scholars to our campus.
At Florida State University, we are very proud of our successes as
well as our emerging reputation as one of the nation's top public
research universities.
Mr. Chairman, let me summarize our primary interests today. The
Southeast Climate Consortium (SECC), which consists of Florida State
University, the University of Florida, the University of Miami, the
University of Georgia, Auburn University, and University of Alabama at
Huntsville, has been at the forefront of research and extension for the
applications of climate predictions to risk reduction for agriculture.
With support from NOAA and USDA, the SECC has developed new methods to
predict the consequences of climate variability for agricultural crops,
forests, and water resources in the southeast United States. In recent
real-life tests, these methods have been applied to the problems that
farmers raising specialty crops face arising from variable rainfall,
temperature, and wild fires. By the use of these methods, these initial
challenges have been successfully met.
In the SECC, Florida State University will provide the climate
forecasts and risk reduction methodology. The University of Florida and
University of Georgia will translate this climate information into
risks associated environmental impacts on agriculture and, with Auburn
University, will work with Extension Services to provide information to
the agricultural community. The University of Miami will provide
economic modeling of agricultural systems. Together UM, UF, and the
University of Alabama-Huntsville are developing new tools to help
minimize climate risks to water quality and quantity, especially for
agriculture. FSU, on behalf of the SECC, seeks $4,500,000 in fiscal
year 2007 for this activity. Utilization of these tools and their
application to agricultural problems in this project has the strong
support of extension managers.
The new tasks for fiscal year 2007 are to develop flood forecasting
methods to help farmers and producers plan for reducing risks of
economic losses and environmental damage; to develop partnerships and
methods for incorporating climate forecasts and other climate
information into agricultural and water policy decisions, and to begin
development of a prototype decision support system for the application
of climate forecasts to water resource management, especially for
agricultural water use.
Mr. Chairman, we believe this research is vitally important to our
country and would appreciate your support.
______
Prepared Statement of Food & Water Watch
My name is Wenonah Hauter. I am the Executive Director of Food &
Water Watch, a non-profit consumer organization. We welcome this
opportunity to present our views on the fiscal year 2007 Agriculture,
Rural Development, Food and Drug Administration and Related Agencies
Appropriations Bill.
usda--food safety and inspection service (fsis)
The Food Safety and Inspection Service (FSIS) is proposing a shift
to a risk-based inspection system. We have the following concerns about
this proposal:
The Agency lacks the statutory authority to execute a risk-based
inspection scheme that would require less than daily inspection.
According to both the Federal Meat Inspection Act (21 U.S.C. 603) and
the Poultry Inspection Act (21 U.S.C. 455), the United States
Department of Agriculture is required to provide continuous inspection
in all establishments that produce meat and poultry products that enter
the food supply.
Furthermore, the FSIS' own glossary defines continuous inspection
as:
Continuous Inspection.--USDA's meat and poultry inspection system
is often called ``continuous'' because no animal destined for human
food may be slaughtered or dressed unless an inspector is present to
examine it before slaughter (antemortem inspection), and its carcass
and parts after slaughter (postmortem inspection). In processing
plants, as opposed to slaughter plants, inspectors need not be present
at all times, but they do visit at least once daily. Processing
inspection is also considered continuous.\1\
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\1\ See http://www.fsis.usda.gov/Help/glossary-C/index.asp.
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Risk-based inspection needs to have a reliable database upon which
to make judgments about which meat and poultry plants meet or exceed
performance standards. At the present time, there are problems with the
data collection within the Food Safety and Inspection Service. The USDA
Inspector General, in a November 2004 audit report, stated the
following about the Performance Based Inspection System (PBIS)
database:
Due to the lack of controls noted during our audit, FSIS cannot be
assured that PBIS data is complete, accurate, and reliable. As a
result, FSIS management may not have the information it needs to
effectively manage its inspection activities. Without effective
controls over data integrity, the PBIS system may be an unreliable
repository that gives FSIS management a false sense that inspection
activities are adequately carried out and sanitation of plant
operations is accurately reported.\2\
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\2\ See http://www.usda.gov/oig/webdocs/2451-01-FM.pdf.
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The Hazard Analysis Critical Control Points (HACCP) inspection
system still has problems. The authority of inspectors to prevent
adulterated products from entering the food supply has been severely
hampered. Company HACCP plans do not require pre-approval from FSIS
before they are implemented. Under HACCP, inspectors have been
relegated to verifying whether company-written HACCP plans are being
followed. Even when FSIS issues directives to companies to reassess
their HACCP plans to take into account new food safety policies (e.g.,
the 2002 directive requiring companies to deal with E. coli 0157:H7 as
an adulterant likely to occur in beef processing), companies often take
long periods of time to implement the new policy.
The HACCP-Based Inspection Models Project (HIMP) in poultry
slaughter still has fewer than two dozen plants participating in the
program. The Government Accountability Office issued the last
comprehensive analysis of this project in December 2001 and pointed out
a number of serious problems.\3\ Inspectors assigned to these plants
report that they are not able to perform food safety functions because
they are assigned to stationary positions on the slaughter lines (e.g.,
they are not able to look inside the cavity of poultry carcasses where
there may be contamination). Furthermore, defects that are considered
to be ``other consumer protection,'' such as blemishes, scabs, tumors,
feathers, and bruises, and would not pass muster in processing plants
using conventional inspection techniques are being permitted to enter
commerce under the HIMP system. We do not believe that they Agency is
prepared to extend this inspection model to the entire poultry industry
at this time. There should be a thorough examination of the HIMP
project before it is expanded.
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\3\ See http://gao.gov/new.items/d0259.pddf.
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Because there has not been a full evaluation of HIMP recently, we
filed a Freedom of Information Act request on December 14, 2005
requesting certain documents so that we could conduct our own study.
FSIS responded that they wanted us to pay more than $10,000 for the
information. We have since scaled back the request, and yet they are
still requesting the exorbitant sum of $2,858 for the records. We are a
non-profit consumer group and we do have access to such large sums of
money. Furthermore, we believe that this information should be
available at no cost to requesters since the agency is proposing to
expand this pilot project that will radically change our inspection
system in slaughter establishments. We believe that Congress should
request full disclosure of this information.
In January 2006, the USDA Inspector General released an audit
report entitled, ``Food Safety and Inspection Service Assessment of the
Equivalence of the Canadian Inspection System'' (Report No. 24601-05-
Hy). The report indicates that Canada was continually exporting meat
and poultry products to the United States that had been subject to less
than daily inspection--in violation of U.S. standards. While those
responsible for enforcing our equivalency agreements at FSIS
recommended taking disciplinary action against Canada for their
repeated violations, they were overruled by the Secretary in 2004. We
find this most troubling. FSIS has repeatedly testified before Congress
that countries that wish to export their meat and poultry products to
the United States must maintain inspection standards that are identical
to those for domestic producers. Yet, in this instance, USDA has chosen
to look the other way.
While Canada has agreed to institute daily inspection in those
establishments that export to the United States, we have learned that
FSIS has been in discussions with the Canadian Food Inspection Agency
(CFIA) to establish a pilot project with a subset of Canadian plants
that would be able to export products that have been subject to less
than daily inspection. This pilot program is being created without the
benefit of congressional input or discussion through rulemaking. We
believe that instituting such a pilot project would be a violation of
the Federal Meat Inspection Act (FMIA) and the Federal Poultry Products
Inspection Act (FPPIA) and it should be stopped before it is
implemented.
We have also learned that Australia is in the process of
considering a ``trial'' of its controversial Meat Safety Enhancement
Program (MSEP) for a beef processor that would like to export its
products to the United States. MSEP is a privatized inspection system
for beef for which there is no comparable system here in the United
States. MSEP trials were last conducted in 1999, but were stopped since
the inspection system raised consumer concerns both here in the United
States and in Europe. We can only surmise that someone at USDA has
signaled to Australia that we would accept beef products produced under
a privatized inspection system.
We view both the Canadian pilot project and the Australian MSEP
trial as vehicles by the current USDA policymakers to institute
backdoor changes to our inspection system through our international
trading partners. Congress has already had to step in to warn USDA on
changing the programs authorized under the 2002 Farm Security and Rural
Development Act through the Doha round of WTO negotiations; it may be
time for Congress to send another shot across the bow to prevent the
undermining of the FMIA and FPPIA through international discussions
that have not had the benefit of congressional or public scrutiny.
For all of these reasons, we do not believe that the Agency is
prepared to make radical changes to the current inspection system, no
matter what terms they use to describe it. The concept of
``continuous'' government inspection has been the core of our meat
inspection system for 100 years, and the Agency should not be permitted
to abandon this principle.
______
Prepared Statement of The Humane Society
As the largest animal protection organization in the country, we
appreciate the opportunity to provide testimony to the Agriculture,
Rural Development, Food and Drug Administration, and Related Agencies
Subcommittee on fiscal year 2007 funding items of great importance to
The Humane Society of the United States (HSUS) and its more than 9.5
million supporters nationwide.
ENFORCEMENT OF ANIMAL WELFARE LAWS
We thank you for your outstanding support during recent years for
improved enforcement by the U.S. Department of Agriculture (USDA) of
key animal welfare laws and we urge you to sustain this effort in
fiscal year 2007. Your leadership is making a great difference in
helping to protect the welfare of millions of animals across the
country. As you know, better enforcement will also benefit people by
helping to prevent: (1) orchestrated dogfights and cockfights that
often involve illegal gambling, drug trafficking, and human violence,
and can contribute to the spread of costly illnesses such as Exotic
Newcastle Disease and bird flu; (2) injuries to slaughterhouse workers
from animals that are still conscious; (3) the sale of unhealthy pets
by commercial breeders, commonly referred to as ``puppy mills''; (4)
laboratory conditions that may impair the scientific integrity of
animal based research; (5) risks of disease transmission from, and
dangerous encounters with, wild animals in or during public exhibition;
and (6) injuries and deaths of pets on commercial airline flights due
to mishandling and exposure to adverse environmental conditions. In
order to continue the important work made possible by the fiscal year
2006 budget, we request the following for fiscal year 2007:
APHIS/ANIMAL WELFARE ACT (AWA) ENFORCEMENT
We request that you support the President's request of $19,142,640
for AWA enforcement under APHIS. We commend the Committee for
responding in recent years to the urgent need for increased funding for
the Animal Care division to improve its inspections of more than 13,000
sites, including commercial breeding facilities, laboratories, zoos,
circuses, and airlines, to ensure compliance with AWA standards. Animal
Care now has 100 inspectors (with four vacancies that the agency is in
the process of filling), compared to 64 inspectors at the end of the
1990s. We are pleased that the President's budget recommends an
increase of $1,481,420 (plus allowance for pay costs) to cover hiring
15 new staff to further improve AWA enforcement in fiscal year 2007.
This increase will enable the agency to handle additional
responsibilities as the number of licensed/registered facilities has
grown by 12 percent from fiscal year 2004 to fiscal year 2005.
APHIS/INVESTIGATIVE AND ENFORCEMENT SERVICES
We request that you support the President's request of $11,738,430
for APHIS Investigative and Enforcement Services. We appreciate the
Committee's consistent support for this division, which handles many
important responsibilities including animal welfare. The President's
budget recommends an increase of $1,235,000 (plus allowance for pay
costs) and 12 staff years for IES in fiscal year 2007. A portion of
this increase will be used to improve enforcement of federal animal
welfare laws. The volume of animal welfare cases is rising
significantly as new facilities become licensed and registered. In
fiscal year 2005, IES conducted 575 animal care investigations, with
169 cases resolved through either civil penalty stipulations or
Administrative Law Judge decisions and a total of $1.1 million assessed
in fines (compared to 288 investigations and 97 cases resolved through
stipulations or ALJ decisions and $548,614 in fines during fiscal year
2004).
OFFICE OF INSPECTOR GENERAL/ANIMAL FIGHTING ENFORCEMENT
We request sustained funding of $800,000 for the Office of
Inspector General to focus on enforcement of animal fighting laws (this
amount is incorporated in the President's request for OIG base
funding). We appreciate the inclusion of $800,000 in each of the past
three fiscal years for USDA's Office of Inspector General to focus on
animal fighting cases. Congress first prohibited most interstate and
foreign commerce of animals for fighting in 1976 and tightened
loopholes in the law in 2002. Since then, USDA has begun to take
seriously its responsibility to enforce this law, working with state
and local agencies to complement their efforts. Dogfighting and
cockfighting are barbaric (but still surprisingly widespread) practices
in which animals are drugged to heighten their aggression and forced to
keep fighting even after they've suffered grievous injuries. Animal
fighting is almost always associated with illegal gambling, and also
often involves illegal drug trafficking and violence toward people.
Dogs bred and trained to fight endanger public safety, and some
dogfighters steal pets to use as bait for training their dogs.
Cockfighting was linked to an outbreak of Exotic Newcastle Disease in
2002-2003 that cost taxpayers more than $200 million to contain. It's
also been linked to the death of at least eight people in Asia
reportedly exposed through cockfighting activity to bird flu. Given the
potential for further costly disease transmission, as well as the
animal cruelty involved, we believe it would be a sound investment for
the federal government to increase its efforts to combat illegal animal
fighting activity.
FOOD SAFETY AND INSPECTION SERVICE/HUMANE METHODS OF SLAUGHTER ACT
(HMSA) ENFORCEMENT
We request sustained funding of no less than $5,000,000 and no
fewer than 63 staff years for HMSA enforcement (this amount is
incorporated in the President's request for FSIS base funding) and
continued funding of $4,000,000 as provided in fiscal year 2006 for
further implementation of the new tracking system. We are grateful that
Congress provided $5 million in fiscal year 2006 to sustain at least 63
full time equivalent positions dedicated solely to inspections and
enforcement related to the Humane Methods of Slaughter Act, plus $4
million to incorporate a new tracking system to ensure compliance with
this law. The HMSA is designed to ensure that livestock are treated
humanely and rendered unconscious before they are killed. The effort to
target funds for this purpose was undertaken following reports of lax
enforcement of the HMSA and animals being skinned, dismembered, and
scalded while still alive and conscious. Implementation of the Humane
Animal Tracking System is ongoing; continued funding of $4 million will
be used to equip remaining facilities.
COOPERATIVE STATE RESEARCH, EDUCATION, AND EXTENSION SERVICE/VETERINARY
STUDENT LOAN FORGIVENESS
We request $1,000,000 to continue a pilot program for the National
Veterinary Medical Service Act, authorized in 2003, that received
initial funding of $500,000 in fiscal year 2006. We appreciate that
Congress has begun to address the critical shortage of veterinarians
practicing in rural and inner-city areas, as well as in government
positions such as at FSIS and APHIS. Having adequate veterinary care is
a core animal welfare concern. There are only 70 veterinarians engaged
in poultry practice to address the needs of approximately nine billion
chickens raised each year in the United States, and only 75
veterinarians addressing the needs of 30 million beef cattle and 102
million pigs, respectively. Veterinarians support our Nation's defense
against bioterrorism (the Centers for Disease Control estimate that 80
percent of potential bioterrorism agents are zoonotic--transmitted from
animals to human). They are also on the front lines addressing public
health problems associated with pet overpopulation, parasites, rabies,
chronic wasting disease, bovine spongiform encephalopathy (``mad cow''
disease), and a host of other concerns. Veterinary school graduates
face a crushing debt burden of $80,000 on average, and the lowest pay
of any of the medical professions, with an average starting salary of
$43,000. For those who choose employment in underserved rural or inner-
city areas or public health practice, the National Veterinary Medical
Service Act authorizes the Secretary of Agriculture to forgive student
debt. It also authorizes financial assistance for those who provide
services during Federal emergency situations such as disease outbreaks
or disasters. We hope you will build on the initial funding provided
last year to expand this needed program under CSREES or such other
account as the Committee deems appropriate.
APHIS/HORSE PROTECTION ACT ENFORCEMENT
We hope you will provide the $492,030 requested by the President
for fiscal year 2007, and we urge the Committee to oppose any effort to
restrict USDA from enforcing this law to the maximum extent possible.
Congress enacted the Horse Protection Act in 1970 to end the obvious
cruelty of physically soring the feet and legs of show horses. In an
effort to exaggerate the high-stepping gate of Tennessee Walking
Horses, unscrupulous trainers use a variety of methods to inflict pain
on sensitive areas of the feet and legs for the effect of the leg-jerk
reaction that is popular among many in the show-horse industry. This
cruel practice continues unabated by the well-intentioned but seriously
understaffed APHIS inspection program. We appreciate the Committee's
help providing modest increases to bring this program close to its
authorized annual funding ceiling of $500,000.
DOWNED ANIMALS AND BSE
We are pleased that the Bush Administration proposed an interim
final rule in January 2004 to ban the use of downed cattle for human
food, in the wake of the discovery of a cow in Washington State that
was infected with Bovine Spongiform Encephalopathy (BSE). We hope the
Committee will codify this ban--and extend it to other livestock
besides cattle--with language barring the Food Safety and Inspection
Service from spending funds to certify meat from downed livestock for
human consumption. While the science to date on BSE has only indicated
transmission from infected cows to people, downer pigs and other downer
livestock are at a significantly higher risk of transmitting other
serious and sometimes fatal illnesses through their meat, such as E.
coli and Salmonella, and these animals, too, suffer when they are moved
en route to slaughter.
As the Committee is aware, some segments of industry and members of
Congress have recommended weakening the USDA downed cattle ban. They
claim that animals unable to walk because of injury pose no health
risk. But injury and illness are often interrelated--an animal may
stumble and break a leg because of disease that causes weakness and
disorientation. And USDA inspectors would have a difficult--if not
impossible--task trying to sort out the reason an animal became non-
ambulatory. Major consumer groups including Consumers Union and
Consumer Federation of America, support groups for victims of food-
borne illness such as Safe Tables Our Priority (S.T.O.P.), Creutzfeldt-
Jakob Disease Foundation, and CJD Voice, food safety organizations,
companies such as McDonald's and Wendy's, and many others have all
pointed out how reckless such a system would be. Of the BSE cases
identified in Canada and the United States to date, 7 out of 8 have
involved downers, and at least 3 of these were identified as downed due
to injuries, including the Washington State case (``calving injuries'')
and a January 2005 case in Canada (``slipped on ice/broken leg'').
From an animal welfare perspective, a comprehensive ban is needed
because a downer cow with a broken leg would suffer just as much as a
sick one if it's dragged through a slaughterplant--maybe even more. A
ban on use of all downers for human food also provides an incentive for
producers to treat animals humanely and prevent livestock from going
down. Even before the administrative ban, USDA estimated that only 0.4
percent to 0.8 percent of all cows processed annually were non-
ambulatory. The downer ban encourages producers and transporters to
engage in responsible husbandry and handling practices, so that this
percentage may be reduced to levels approaching zero. Temple Grandin--
advisor to the American Meat Institute and others in the meat
industry--has noted that as many as ninety percent of all downers are
preventable. Cases that involve broken bones and other injuries are
perhaps the most preventable with improved husbandry.
Most Americans had no idea that animals too sick or injured to walk
were being dragged with chains or hauled by bulldozer en route to the
food supply. When that fact came to light in December 2003, USDA's
prompt decision to ban all downer cattle from human food calmed
consumers. Unraveling the ban would undermine consumer confidence. More
than 99 percent of the 22,000+ public comments USDA received on its
downer ban called on the agency to maintain and strengthen its downer
ban, with most asking that other species be included. For a report on
the comments received by the agency, please go to: http://
files.hsus.org/web-files/PDF/2004_06_16_rept_USDA_comments.pdf.
USDA testimony before various congressional committees has made
clear that the agency need not rely on slaughterplant testing of
downers for BSE surveillance purposes. Surveillance of downers can and
should be conducted at rendering plants and on farms.
In addition to the downer issue, we urge the Committee to provide
adequate funding to ensure meaningful enforcement by the Food and Drug
Administration of its ``feed ban,'' designed to prevent BSE-
contaminated animal products from being fed to other animals. We are
concerned that inspectors visit facilities infrequently and rely on
self-reporting by those facilities and paperwork checking rather than
first-hand evaluation of feed content and dedicated production lines.
We are also concerned that FDA relies a great deal on state agencies to
conduct this oversight, when most states face severe budget constraints
that may compromise their ability to handle this job. Preventing the
spread of BSE is vital to the Nation as a whole, for public health, the
agricultural industry, and animal welfare. Vigorous enforcement of the
feed ban is an essential component of this effort. We hope adequate
Federal funds will be provided in fiscal year 2007 to meet this
challenge.
Again, we appreciate the opportunity to share our views and
priorities for the Agriculture, Rural Development, and Related Agencies
Appropriation Act of fiscal year 2007. We appreciate the Committee's
past support, and hope you will be able to accommodate these modest
requests to address some very pressing problems affecting millions of
animals in the United States. Thank you for your consideration.
______
Prepared Statement of Interregional Research Project No. 4
The Interregional Research Project No. 4 (IR-4 Project) was
organized 43 years ago by the Directors of the State Agricultural
Experiment Stations (SAES) to obtain regulatory clearances for crop
protection chemicals on specialty or minor food crops when the economic
incentives for the registrants precluded private sector investment. IR-
4 has been administered by the United States Department of
Agriculture's (USDA's) Cooperative State Research, Education, and
Extension Service (CSREES) since its inception in 1963. The
Agricultural Research Service (ARS) component of the USDA established a
companion minor use program in 1976 to provide further program support.
The objectives of the IR-4 Project were expanded in 1977 to include
registration of pest control products for the protection of nursery,
floral, Christmas tree, and turf crops and again in 1982 when the
objective of clearance of biological control agents or biopesticides
was added.
The IR-4 Project works as a model government program that fosters
cooperative partnerships between the USDA (CSREES and ARS), the IR-4
Headquarters and Regional staff, the land grant university system, the
crop protection industry, commodity and grower groups, the
Environmental Protection Agency (EPA), and the California Department of
Pesticide Regulation (CDPR) to bring crop protection solutions to
specialty crop growers.
The Food Use Program is the primary focus of the IR-4 Project. To
streamline the project request process, growers, commodity groups,
university researchers and extension personnel, USDA researchers and
other interested parties can submit on-line requests directly from our
website at: http://www.ir4.rutgers.edu/FOODRequestForm.htm. The
requests are recorded and reviewed by IR-4 Headquarters staff. At the
annual Food Use Workshop, growers, commodity groups, university and
USDA researchers, extension personnel, and EPA staff discuss and
prioritize the projects by consensus. The high priority projects are
finalized the following month at the annual National Research Planning
Meeting where field residue and analytical laboratory assignments are
made based on the best use of available USDA-ARS and land grant
university personnel within the funding provided by Congress. For more
information concerning the food use program and the status of on-going
projects or studies, access the IR-4 website at: http://
www.ir4.rutgers.edu/foodcrops.html. All IR-4 food use residue research
is carried out by EPA approved Good Laboratory Practices (GLP's) with
coordination and implementation by the Quality Assurance Unit (QAU).
Annual training of the Field Research Directors, laboratory personnel
and support staff involved in the conduct of work is essential to the
success of the IR-4 Project. GLP compliance audits of facilities and of
ongoing field and laboratory procedures, provides assurance that IR-4
food safety data will be accepted by the crop protection industry,
growers and the EPA.
The 991 food use clearances obtained in 2005 boosted the 43 year
total to over 9,300 clearances. It is interesting to note that 53
percent (4,949) of all clearances in the program's history have been
obtained in the last 8 years. In pursuit of this remarkable
accomplishment, IR-4 continues its commitment to producing high
quality, compliant scientific data in order to meet EPA's GLP
requirements and strive to further enhance our effectiveness and
efficiency by providing continuing GLP education and/or QA training
sessions for IR-4 personnel and cooperators, audit data and reports, as
well as, review and revise Standard Operating Procedures (SOP's).
The research program for year 2006 consists of approximately 110
studies supported by 701 field trials. One hundred and six (106) of
these studies will require the collection of residue samples and 4
studies will be for collecting efficacy and/or crop safety data to
support specific data needs. The smaller efficacy program this year is
a result of the reduced budget in 2006 thereby eliminating the pilot
efficacy program. Five hundred and twenty-eight (528) of the field
trials will be conducted by regional State agricultural research
stations, while USDA-ARS will be conducting 115 field trials and Canada
has agreed to cooperate on 58 trials.
The Section 18 Economic Benefits/Loss Avoidance Project to document
potential economic impact (loss) data from state submitted Section 18's
approved by the EPA and supported by IR-4 residue data was initiated in
1998. Since this initiative began, a total of 205 Section 18's have
been converted to full Section 3 labels as a result of IR-4 petitions.
This is the result of IR-4's commitment to minimize the number of years
that Section 18's are needed on new crop protection products before
Section 3 labels are approved by the EPA. The total over the eight year
period from 1998 to 2005 (where the data are available) bring the total
economic impact/loss avoidance to $12.589 billion from 1,229 Section
18's covering 47 States.
The ornamental industry is an extremely important component of
specialty crop agriculture with over $15 billion in annual sales which
comprise over 35 percent of all specialty crop sales. The research to
develop efficacy and crop safety data to support registration of both
traditional chemicals and biopesticides as pest control tools on
ornamentals continues to be an important component of our overall
program. The industry presents a formidable challenge since it involves
a diverse array of crops in various markets such as floral, bulbs,
forestry seedlings, Christmas trees, nursery, turf, commercial and
interior landscapes, greenhouses, etc.
Like the Food Use Program, requests are received, recorded and
reviewed by IR-4 Headquarters. At the annual Ornamental Horticulture
Workshop, growers, commodity groups, university and USDA researchers,
extension personnel and EPA staff discuss and prioritize the projects
by consensus. The efficacy and crop safety trials are planned in
discussions between the IR-4 Headquarters Ornamental Horticulture
Manager, regional field coordinators and ARS leadership. In 2006, the
Ornamental Horticulture research program will focus on the high
priority projects established at the annual workshop: Phytophthora
Efficacy, Pythium Efficacy, Thrips Efficacy, Coleopteran Efficacy, and
Broadleaf Weed and Sedge Management Tools Crop Safety. The research
program also enables each regional field coordinator to focus some
discretionary funds on trials of specific regional interest. The
Northeast and Southern regions are coordinating their funding on
herbicide fern safety, while the Western region enhanced the testing
program for the high priority herbicide project.
The Biopesticide Research Program continued its 8 year of
competitive grant funding of projects for $400,000 and amounting to
over $3,325,000 since its inception. In addition to funding projects
that have focused in recent years on the biopesticides considered
Advanced Stage (near commercialization or commercialized but expanding
uses to specialty crops), IR-4 has continued to help biopesticide
registrants with regulatory support needs.
For the 2006 Biopesticide Research Program, IR-4 received a total
of 113 proposals requesting approximately $1.2 million. Of the 113
proposals, 21 were Early Stage, 64 were Advanced Stage and 28 were
Demonstration Stage of which 70 involved disease management, 24 were
for insect/mite management, 5 were for weed control, 11 were for
nematode control, 2 were plant growth regulators and 1 involved bird
management. The 2006 program will fund 42 of the project proposals.
Without the existence of the IR-4 Project, fewer safe and effective
crop protection chemicals and biological alternatives would be
available for use on specialty crops today. The crop protection
industry has continued to be an excellent partner in working with IR-4
to provide their latest technologies, both chemical and biological, for
specialty crop uses. However, the Project must continue to evolve in
order to stay relevant. To this end, the importance of the continued
special research grant funding and strategic plan implementation will
be critical to the future of IR-4.
Three hot topics' for the fiscal year 2007 Congressional
Appropriations hearings were recently posed to the Cooperative State
Research, Education and Extension Service concerning the IR-4 Project.
The questions asked and answers provided are as follows:
Question. What has the Inter-regional Project #4 (IR-4) done to
provide safe and effective pest management solutions for growers of
specialty crops in the United States?
Answer. By cooperating with researchers, producers, the
agrichemical industry and Federal agencies, IR-4 has achieved over
9,300 food crop and 10,000 ornamental crop registrations for pest
management products since the project began in 1963. In 2004 and 2005
alone, there were over 2,000 clearances for these specialty crops which
are collectively valued at $43 Billion. Priorities for future research
and future registrations are established at IR-4's annual Food Use and
Ornamental Horticulture Workshops and a record attendance of over 325
stakeholders participated in defining IR-4's workplan for 2006.
Question. Since horticultural/specialty crops are an important part
of U.S. agriculture, what is being done to improve export opportunities
for the producers of these crops?
Answer. Over the past decade, the agrichemical industry has
developed a range of new, safer products and IR-4 has been very
successful in expanding the registrations of these products
facilitating their use on specialty crops. This has significantly
benefited growers producing food for domestic markets. However, some of
their new lower risk products are not approved by some of the U.S.
trading partners resulting in U.S. growers not being able to use some
of these products if their produce is going to be shipped to countries
that do not have Maximum Residue Limits (MRLs) established for these
new products. Therefore, it has become critically important for a
product to be available globally in order to level the playing field
for United States specialty crop growers who wish to export their
crops. IR-4 is in a unique position to facilitate the Global Specialty
Crop Initiative where existing data in the IR-4 Library can be used to
solve some of the trade issues. This initiative would enhance global
registrations and reduce trade barriers, while at the same time further
promote the use of new, safer pest management products both
domestically and world wide.
Question. What is the economic impact of the IR-4 Project on United
States specialty crop growers?
Answer. Using economic loss avoidance data submitted to the EPA by
47 states covering over 1225 Section 18 requests supported by IR-4
specialty crop residue data, the economic loss avoidance between 1998
and 2005 has been $12.6 billion.
______
Prepared Statement of the Metropolitan Water District of Southern
California
The Metropolitan Water District of Southern California is writing
in support of the following Federal program under the Department of
Agriculture's (USDA) budget that we believe is deserving of your
Subcommittee's support during the fiscal year 2007 budget process:
Natural Resources and Environment Mission Area--Agency: Natural
Resources Conservation Service (NRCS)--Farm Bill Programs (Funded by
the Commodity Credit Corporation)--Environmental Quality Incentives
Program:
--$1 billion requested by the President nationwide with $25 million
designated by the NRCS for the Colorado River Basin Salinity
Control Program.
The Metropolitan Water District of Southern California is a public
agency that was created in 1928 to meet the supplemental water demands
of people living in what is now portions of a six-county region of
southern California. Today, the region served by Metropolitan includes
approximately 18 million people living on the coastal plain between
Ventura and the international boundary with Mexico.
Included in our region are more than 300 cities and unincorporated
areas in the counties of Los Angeles, Orange, San Diego, Riverside, San
Bernardino, and Ventura. We provide over half of the water used in our
5,200-square-mile service area and help our members to develop local
supplies through increased water conservation, recycling, storage and
other resource-management programs. Metropolitan's imported water
supplies come from the Colorado River via our Colorado River Aqueduct
and from northern California via the State Water Project's California
Aqueduct.
MWD continues to support USDA implementation of conservation
programs. MWD firmly believes that interagency coordination, along with
incentive-based cooperative conservation programs that facilitate the
development of partnerships, are critical to addressing natural
resources concerns, such as water quality degradation, wetlands loss
and wildlife habitat destruction. It is vital that the Congress
provides USDA with the funding necessary to successfully carry out its
commitment to natural resources conservation.
Environmental Quality Incentives Program (EQIP)
An important program for MWD has been the Colorado River Basin
Salinity Control Program, which is funded by USDA at the Federal level
through the Environmental Quality Incentives Program. MWD recommends
that EQIP be funded at $1 billion in fiscal year 2007, as proposed in
the President' Budget, with the Colorado River Basin Salinity Control
Program funded at $25 million, 2.5 percent of the EQIP budget, as
requested by the seven Colorado River Basin states through the Colorado
River Basin Salinity Control Forum.
EQIP provides assistance to farmers and ranchers who face threats
to soil, water, air and related natural resources on their land. EQIP
provides assistance in a manner that will promote agricultural
production and environmental quality as compatible goals. NRCS offers
the program throughout the Nation.
In Public Law 104-127, Congress amended the Colorado River Basin
Salinity Control Act to direct the Secretary of Agriculture to carry
out salinity control measures in the Colorado River Basin as part of
EQIP. Beginning with the first full year of EQIP funding in 1997
through 2001, USDA's participation in the Colorado River Basin Salinity
Control Program (Salinity Control Program) had significantly diminished
as compared to the 1996 level of funding for salinity control. After
requests had been made by the Colorado River Basin Salinity Control
Forum (Forum), the interstate organization responsible for coordinating
the seven Basin states' salinity control efforts, and others, as well
as directives from the Congress, USDA concluded that the Salinity
Control Program warranted a multi-state river basin approach. The Forum
is composed of Gubernatorial appointees from Arizona, California,
Colorado, Nevada, New Mexico, Utah, and Wyoming. Clearly, Colorado
River Basin salinity control has benefits that are not merely local or
intrastate in nature, but continue downstream. EQIP is also important
because it provides funding for agricultural source water protection
measures that protect and improve the quality of Metropolitan's
imported supplies from Northern California.
The Colorado River is a large component of Southern California's
regional water supply and its relatively high salinity causes
significant economic impacts on water customers in MWD's service area,
as well as throughout the Lower Colorado River Basin (Lower Basin). MWD
and the Bureau of Reclamation (Reclamation) completed a Salinity
Management Study for Southern California in June 1999. The study
concluded that the high salinity from the Colorado River continues to
cause significant impacts to residential, industrial and agricultural
water users. Furthermore, high salinity adversely affects the region's
progressive water recycling programs, diminishes the effectiveness of
water conservation efforts, and is contributing to an adverse salt
buildup through infiltration into Southern California's irreplaceable
groundwater basins.
In April 1999, MWD's Board of Directors authorized implementation
of a comprehensive Action Plan to carry out MWD's policy for management
of salinity. The Action Plan focuses on reducing salinity
concentrations in Southern California's water supplies through
collaborative actions with pertinent agencies, recognizing that an
effective solution requires a regional commitment. MWD, the Association
of Groundwater Agencies, the Southern California Association of
Publicly Owned Treatment Works, and the WateReuse Association of
California have formed a Salinity Management Coalition.
During 2002, the Coalition was expanded to include major water and
wastewater agencies throughout Southern California. Presently, the ten
members of the coalition are working to implement a Strategic Action
Plan that focuses primarily on local contributions to southern
California's high-salinity problem.
In addition, Southern California leaders are working with urban
areas in Arizona, Nevada, New Mexico, and Texas to find solutions to
mutual problems with salinity in imported supplies, such as from the
Colorado River, and other sources. These agencies participate in the
annual National Salinity Summit to examine and coordinate salinity
management activities.
Concentrations of salts in the Colorado River cause hundreds of
millions of dollars in damage in the United States according to the
U.S. Department of the Interior. Implementation of salinity control
measures:
--increases the yield of salt sensitive crops and decreases water use
for leaching in the agricultural sector,
--increases the useful life of galvanized water pipe systems, water
heaters, faucets, garbage disposals, clothes washers, and
dishwashers, and decreases the use of bottled water and water
softeners in the household sector,
--decreases the use of water for cooling, and the cost of water
softening, and increases equipment service life in the
commercial sector,
--decreases the use of water and the cost of water treatment, and
decreases sewer fees in the industrial sector,
--increases the life of treatment facilities and pipelines in the
utility sector,
--eases the meeting of wastewater discharge requirements to comply
with National Pollutant Discharge Elimination System permit
terms and conditions, and decreases desalination and brine
disposal costs due to less accumulation of salts in groundwater
basins, and
--decreases use of imported water for leaching and the cost of
desalination and brine disposal for recycled water.
Absent the Salinity Control Program, impacts would progressively
increase with continued agricultural and urban development upstream of
California's points of Colorado River diversion. Droughts will cause
spikes in salinity levels in the future that will be highly disruptive
to Southern California water management and commerce. The Salinity
Control Program has proven to be a very cost-effective approach to help
mitigate the impacts of higher salinity. Adequate Federal funding of
the Salinity Control Program is essential.
The Forum issued its 2005 Review, Water Quality Standards for
Salinity, Colorado River System (2005 Review) in October 2005. The 2005
Review found over 900,000 tons of salinity needs to be controlled
annually to maintain 2004 salinity levels through 2025. From 1994
through 2003, funding for USDA's salinity control program did not equal
the Forum-identified funding need for the portion of the program the
Federal Government is responsible to implement. While NRCS has
designated Colorado River Basin salinity control as an area of special
interest, appointed a multi-state coordinator, and allocated about
$19.5 million in fiscal years 2005 and 2006, it is essential that
implementation of salinity control efforts through EQIP continue to be
accelerated to reduce economic impacts. The Basin states and farmers
continue to stand ready to pay their share of the implementation costs
of EQIP.
The Forum has determined that allocation of 2.5 percent of the EQIP
funds, that is $25 million, is needed in fiscal year 2007 for on-farm
measures to control Colorado River Basin salinity. Funding at this
level will permit the state adopted and U.S. Environmental Protection
Agency approved water quality standards to be met. With 2.5 percent of
the EQIP cost share financial assistance, monitoring, and technical
assistance funding requested by the President allocated to the Salinity
Control Program, an additional $21 million in states and local cost
sharing could be committed.
MWD urges the Subcommittee to support funding of $1 billion for
EQIP, the amount requested in the President's Budget, and advise USDA
that $25 million, or 2.5 percent of the EQIP funds, be designated for
the Salinity Control Program. Thank you for your consideration of our
testimony. USDA's conservation programs are critical for achieving
Colorado River Basin salinity control objectives, as well as broader
source water quality protection objectives in the Colorado River Basin
and California.
We look forward to working with you and your Subcommittee. Please
contact me at (213) 217-6211, if I can answer any questions or provide
additional information.
______
Prepared Statement of the Midwest Advanced Food Manufacturing Alliance
(MAFMA)
The Midwest Advanced Food Manufacturing Alliance (MAFMA) is a
research consortium involving 13 leading Midwestern universities
(University of Illinois, Indiana University, Iowa State University,
Kansas State University, Michigan State University, University of
Minnesota, University of Missouri, University of Nebraska, North Dakota
State University, Ohio State University, Purdue University, South
Dakota State University, University of Wisconsin). MAFMA expedites the
development of new manufacturing and processing technologies for food
and related products derived from U.S. produced crops and livestock and
thus contributes to the economic development of the U.S. food industry,
one of this country's premier industry sectors. The research of MAFMA
is conducted by scientists in food science and technology, food
engineering, nutrition, microbiology, and other relevant disciplines
from universities participating in the MAFMA consortium. MAFMA sponsors
an annual peer-reviewed research competition where superior research
proposals are selected from among the submissions of scientists from
these 13 universities. Specific research proposals are funded on a
competitive basis to university scientists who must also demonstrate
matching funds from non-Federal sources (primarily the food industry)
for research involving processing, packaging, storage, and
transportation of food products. The close cooperation between
university and corporate researchers assures that the latest scientific
advances are applied to the most relevant problems and that any
solutions will be efficiently transferred and used by the private
sector. MAFMA research proposals are peer-reviewed by scientists from
academia and industry who are not affiliated with the 13 institutions
or any of the companies providing matching funds which assures that the
proposed research is sound and likely to contribute valuable scientific
information. The MAFMA project has been funded for 12 years and this
proposal will fund the 13th year of competition. During the past 12
years, the MAFMA consortium has funded 136 projects for a total of
$4,327,570 of USDA funds and an impressive total of $6,369,623 in
matching funds from non-Federal (primarily food industry) sources
involving 193 companies and other entities.
______
Prepared Statement of the National Association of State Foresters
INTRODUCTION
The National Association of State Foresters (NASF) is pleased to
provide testimony on the U.S. Department of Agriculture (USDA) budget
request for fiscal year 2007. Representing the directors of State
forestry agencies from all 50 States, eight U.S. territories, and the
District of Columbia, our testimony centers around those program areas
most relevant to the long-term forestry operations of our constituents:
Research, Education, and Economics, as well as Natural Resources and
Environment. We believe the USDA budget for fiscal year 2007, which
offers opportunities for advancing the sustainable management of
private forestland nationwide, can be strengthened through our
recommendations.
USDA COOPERATIVE STATE RESEARCH, EDUCATION, AND EXTENSION SERVICE
(CSREES) PROGRAMS
Cooperative Forestry Research (Mcintire-Stennis) Program.--The
Cooperative Forestry Research (McIntire-Stennis) Program (CFRP) is a
crucial part of the foundation that underlies academic and scientific
understanding of the Nation's forest resources. McIntire-Stennis CFRP
was originally enacted in order to provide universities with formula
funds for the explicit purpose of research in the field of forestry,
which was not provided for in similar research funding programs. For
more than 40 years, CFRP has equipped both private and land-grant
universities with the ability to produce invaluable research concerning
forest productivity, environmental quality, and technologies for
monitoring and extending the natural resource base. The program also
provides rigorous scientific education and training for university
students--the future managers of the Nation's forest resources.
Universities, supported by base funds from the Federal Government,
have consistently supplied science-based forestry research not
affiliated with any particular resource use or interest group. Without
sufficient base funds from the Federal Government, society will lose
the benefits wrought by this productive partnership.
NASF recommends $24.5 million for the Cooperative Forestry Research
(McIntire-Stennis) Program. The proposed increase in CFRP will help the
program continue to serve as the cornerstone of forest research in
universities, providing knowledge central to sound management from
environmental, economic, and social perspectives. In addition, we
strongly urge the Subcommittee to reject the President's proposal to
shift 59 percent of the program to competitive funding.
The Renewable Resources Extension Act (Rrea).--The Renewable
Resources Extension Act (RREA) facilitates the transfer of needed
forestry information and technology to non-industrial private forest
landowners, as well as loggers and small businesses involved with
forest resource management.
Extension's education programs aid private landowners in
understanding their management options and responsibilities, and
encourage them to take advantage of other technical and financial
assistance programs.
NASF recommends funding RREA at $4.1 million for fiscal year 2007,
in order to sustain the program's ability to address critical extension
and stewardship needs.
FARM BILL CONSERVATION PROGRAMS
NASF believes that the conservation programs enacted in the 2002
Farm Bill are integral for protecting water quality, erodible soils,
wildlife habitat, and wetlands associated with agricultural and
forestry operations. Trees and forestry practices are often the best
solution to many of the conservation challenges arising from these
operations.
NASF recommends funding for the Environmental Quality Incentives
Program (EQIP) at the fiscal year 2006 level of $1.2 billion, full
funding for the Conservation Reserve Program (CRP), and $85 million for
the Wildlife Habitat Improvement Program (WHIP). NASF supports the
President's fiscal year 2007 funding proposal of $342 million for the
Conservation Security Program (CSP). NASF recommends that the
Subcommittee encourage the Secretary of Agriculture and the NRCS to
expand the emphasis on forestry practices in EQIP and the other Farm
Bill Conservation Programs.
These programs are important for landowners with both forest and
agricultural land, as well as farmers who wish to plant trees for
conservation purposes on their agricultural lands. Nearly two thirds of
the land in the United States is forested, the majority of which is
privately owned. Investing Federal funds in conservation practices on
private forest lands produces benefits for all, not simply landowners.
These benefits include abundant clean water for drinking and
recreation, improved wildlife habitat, open space, viable rural
economies, and many other tangible and intangible public benefits.
conclusion
The National Association of State Foresters seeks the
Subcommittee's support for a USDA fiscal year 2007 budget that will
make sure the public's conservation needs--provided by private
landowners--are met. Thank you for the opportunity to provide our
testimony.
______
Prepared Statement of the National Coalition for Food and Agricultural
Research
Dear Mr. Chairman, Ranking Member Kohl and Members of the
Subcommittee: On behalf of the National Coalition for Food and
Agricultural Research \1\ (National C-FAR), we are pleased to submit
comments in strong support of enhanced public investment in food and
agricultural research, extension and education as a critical component
of Federal appropriations for fiscal year 2007 and beyond. National C-
FAR serves as a forum and a unified voice in support of sustaining and
increasing public investment at the national level in food and
agricultural research, extension and education. National C-FAR is a
nonprofit, nonpartisan, consensus-based and customer-led coalition
established in 2001 that brings food, agriculture, nutrition,
conservation and natural resource organizations together with the food
and agriculture research and extension community.
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\1\ As part of its mission, National C-FAR seeks to increase
awareness about the value of food and agricultural research, extension
and education. For example, National C-FAR is hosting an educational
series of ``Lunch-N-Learn'' seminars on the hill, featuring leading-
edge researchers on timely topics to help demonstrate the value of
public investment in food and agricultural research, extension and
education. More information about National C-FAR and its programs is
available at http://www.ncfar.org.
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Support for Fiscal Year 2007 Funding for Food & Agricultural Research,
Extension & Education
CSREES--National C-FAR urges the Subcommittee and Committee to
support the Administration's fiscal year 2007 request for USDA's
Cooperative State Research, Education, and Extension Service (CSREES)
of $1.038 billion, and to augment funding to the extent practicable
since it represents a represents a significant decrease from fiscal
year 2006 funding levels. In particular, National C-FAR supports the
Administration's $247.5 million request for the National Research
Initiative (NRI). This represents a significant increase over fiscal
year 2006 levels. While a portion of the proposed increase occurs
through the shifting of Section 406 Integrated Activities funding and
responsibilities (such as food safety, pest management, and water
quality) to NRI, funding for NRI would still realize a net increase of
$24 million. Significantly, the Administration's proposal increases the
cap for Integrated Activities funding, providing more funding for
projects that include both research and extension components.
The NRI supports research on key problems of national and regional
importance in biological, environmental, physical, and social sciences
relevant to agriculture, food, and the environment on a peer-reviewed,
competitive basis. Additionally, the NRI enables USDA to leverage a
portion of its funds for food and agricultural research, extension and
education by fostering the development of new partnerships with other
Federal agencies that advance agricultural science. Examples of
successful collaborations include USDA's involvement in the Microbial
Genome Sequencing Program, the Maize Genome Program, the Microbial
Observatories program, the Plant Feedstock Genomics for Bioenergy
program, the Metabolic Engineering program, and the Climate Change
Science Plan.
ARS.--National C-FAR is concerned about the Administration's
proposed $123 million cut in funding for the USDA Agricultural Research
Service (ARS), as compared with fiscal year 2006 funding levels. Indeed
ARS funding has been cut each of the past several years. Research
conducted by ARS helps to ensure high-quality, safe food, and other
agricultural products, assess the nutritional needs of Americans,
sustain a competitive agricultural economy and enhance the natural
resource base and the environment. The steady erosion in ARS funding
could jeopardize the ability of the agency to carry out its important
mission.
ERS.--National C-FAR urges the Subcommittee and Committee to
support the Administration's fiscal year 2007 request of $83 million
for the USDA, Economic Research Service (ERS), which represents a
modest increase over the fiscal year 2006 level. Many of the research
outcomes generated through ERS efforts provide value in both policy and
business application terms far in excess of what the modest size of the
ERS budget might suggest. An important part of the Administration's
budget includes $5 million for the ERS to establish and maintain data
collection on the demographic, economic, government program
participation, and other information from samples of non-farm rural
households and rural-based farm households, over time. National C-FAR
believes such new and valuable data is necessary for a variety of
purposes, including estimating impacts of farm policy changes. National
C-FAR urges full funding of this initiative to assure that agricultural
and rural economic analysts can reap the minimum necessary value added
that will, in turn, enhance contributions to a sound farm policy and
more robust rural economies throughout the Nation.
National C-FAR urges that funding for food and agricultural
research, extension and education be augmented to the maximum extent
practicable, as an important next step toward building the funding
levels needed to meet identified food and agricultural research,
extension and education needs.
As a coalition representing stakeholders in both the research,
extension and education community and the customers' who need and
depend upon their outcomes, National C-FAR urges expanded public
participation in the Administration's research priority setting and
funding decision process and stands ready to work with the
Administration and other interested stakeholders toward that end.
DEMONSTRATED VALUE OF PUBLIC INVESTMENTS IN FOOD AND AGRICULTURAL
RESEARCH, EXTENSION AND EDUCATION
Public and private investments in U.S. agricultural research and
practical application of results have paid huge dividends to the United
States and the world, especially in the latter part of the 20th
century. However, these dividends are the result of past investments in
agricultural research.
If similar research dividends are to be realized in the future,
then the Nation must commit to a continuing investment that reflects
the long-term benefits of food and agricultural research.
Food and agricultural research, extension and education to date
have helped provide the United States with an agricultural system that
consistently produces high quality, affordable food and natural fiber,
while at the same time:
--Creating Jobs And Income.--The food and agricultural sector and
related industries provide over 20 million jobs, about 17
percent of U.S. jobs, and account for nearly $1 trillion or 13
percent of GDP.
--Helping Reduce The Trade Deficit.--Agricultural exports average
more than $50 billion annually compared to $38 billion of
imports, contributing some $12 billion to reducing the $350
billion trade deficit in the nonagricultural sector.
--Providing Many Valuable Aesthetic And Environmental Amenities To
The Public.--The proximity to open space enhances the value of
nearby residential property. Farmland is a natural wastewater
treatment system. Unpaved land allows the recharge of the
ground water that urban residents need. Farms are stopovers for
migratory birds. Farmers are stewards for 65 percent of non-
Federal lands and provide habitat for 75 percent of wildlife.
--Sustaining Important Strategic Resources.--This Nation's abundant
food supply bolsters national security and eases world tension
and turmoil. Science-based improvements in agriculture have
saved over a billion people from starvation and countless
millions more from the ravages of disease and malnutrition.
Publicly financed research, extension and education are necessary
complements to private sector research, focusing in areas where the
private sector does not have an incentive to invest, when (1) the pay-
off is over a long term, (2) the potential market is more speculative,
(3) the effort is during the pre-technology stage; and (4) where the
benefits are widely diffused. Public research, extension and education
help provide oversight and measure long-term progress. Public research,
extension and education also act as a means to detect and resolve
problems in an early stage, thus saving American taxpayer dollars in
remedial and corrective actions.
By any standard, the contributions of publicly supported
agricultural research, extension and education to advances in food
production and productivity and the resulting public benefits are well
documented. For example, an analysis by the International Food Policy
Research Institute of 292 studies of the impacts of agricultural
research and extension published since 1953 (Julian M. Austin, et al, A
Meta-Analysis of Rates of Return to Agricultural Research, 2000) showed
an average annual rate of return on public investments in agricultural
research and extension of 81 percent!
NATIONAL C-FAR URGES ENHANCED FEDERAL FUNDING FOR FOOD AND AGRICULTURAL
RESEARCH, EXTENSION AND EDUCATION
National C-FAR appreciates the longstanding support this
Subcommittee and the full Committee have demonstrated through funding
food and agricultural research, extension and education programs over
the years that have helped the U.S. food and agricultural sector be a
world leader and provide unprecedented value to U.S. citizens, and
indeed the world community.
National C-FAR is deeply concerned that shortfalls in funding in
recent years for food and agricultural research, extension and
education jeopardize the food and agricultural community's continued
ability to maintain its leadership role and more importantly respond to
the multiple, demanding challenges that lie ahead. Federal funding for
food and agricultural research, extension and education has been flat
for over 20 years, while support for other Federal research has
increased substantially. Public funding of agricultural research in the
rest of the world during the same time period has reportedly increased
at a nearly 30 percent faster pace.
Reduced public investment in food and agricultural research,
extension and education may well be a result of a view that the U.S.
food and agricultural system is an unprecedented success story.
However, societal demands and expectations placed upon the food and
agricultural system are ever-changing and growing. Simply stated,
Federal funding has not kept pace with identified priority needs.
National C-FAR believes it is imperative to lay the groundwork now
to respond to the many challenges and promising opportunities ahead
through Federal policies and programs needed to promote the long-term
health and vitality of food and agriculture for the benefit of both
consumers and producers. Stronger public investment in food and
agricultural research, extension and education is essential in
producing research outcomes needed to help bring about beneficial and
timely solutions to multiple challenges. Multiple examples, such as
those listed below, serve to illustrate current and future needs that
arguably merit enhanced public investment in research, extension and
education so that the food and agricultural system can respond to these
challenges on a sustainable basis:
--Strengthened bio-security is a pressing national priority. There is
a compelling need for improved bio-security and bio-safety
tools and policies to protect against bio-terrorism and dreaded
problems such as foot-and-mouth and ``mad cow'' diseases and
other exotic plant and animal pests, and protection of range
lands from invasive species.
--Energy costs are escalating, dependence on petroleum imports is
growing and concerns about greenhouse gases are rising.
Research, extension and education can enhance agriculture's
ability to provide renewable sources of energy and cleaner
burning fuels, sequester carbon, and provide other
environmental benefits to help address these challenges, and
indeed generate value-added income for producers and stimulate
rural economic development.
--Food-linked health costs are high. Some $100 billion of annual U.S.
health costs are linked to poor diets, obesity, food borne
pathogens and allergens. Opportunities exist to create
healthier diets through fortification and enrichment.
--Research, extension and education are key to providing to solutions
to environmental issues related to global warming, limited
water resources, enhanced wildlife habitat, and competing
demands for land and other agricultural resources.
--There was considerable debate during the last farm bill
reauthorization about how expanded food and agricultural
research, extension and education could enhance farm income and
rural revitalization by improving competitiveness and value-
added opportunities.
--Population and income growth are expanding the world demand for
food and natural fiber and improved diets. World food demand is
projected to double in 25 years. Most of this growth will occur
in the developing nations where yields are low, land is scarce,
and diets are inadequate. Without a vigorous response, demand
will only be met at a great global ecological cost.
--Regardless of one's views about biotechnology and genetic
resources, an effective publicly funded research role is needed
for oversight and to ensure public benefits.
Translational education (extension) is a vital link connecting the
research community to those who need and use research outcomes. The
extension and education system helps translate basic and applied
research outcomes into practical applications and more timely
implementation by the end user community, thus helping to realize
positive economic, environmental, health, food security and a host of
other benefits in the food and agricultural system, and for the
consuming public. The extension community is evolving its mission in a
positive direction, seeking to engage constituents in a way that not
only fulfills the traditional extension role but also actively solicits
feedback concerning research and extension needs as identified by the
customers' who need research outcomes. This is consistent with National
C-FAR's mission of increasing stakeholder involvement in decision
making about research priorities and funding. The USDA NRI has made
significant progress in recognizing the extension role, through funding
of projects that undertake an integrated research and extension
approach. National C-FAR strongly supports funding for extension and
education.
Finally, there is a continuing need to build the human capacity of
expertise to do quality food and agricultural research, extension and
education, and to implement research outcomes in the field and
laboratory. The food and agricultural sciences face a daunting task of
supplying the Nation with the next generation of scientists and
educators. If these basic human resource needs are not met, then the
Nation will face a shortage of trained and qualified individuals.
Public investment in food and agricultural research, extension and
education today and in the future must simultaneously satisfy needs for
food quality and quantity, resource preservation, producer
profitability and social acceptability. National C-FAR supports the
public funding needed to help assure that these interdependent needs
are met.
A Sense of the Congress resolution endorsed by National C-FAR to
double funding in food and agricultural research, extension and
education within five years was incorporated into the 2002 Farm Bill
that was enacted into law. However, the major commitment to expanded
research has not yet materialized. At the four-year mark, the larger
reality is the threat of funding cuts.
CONCLUSION
In conclusion, National C-FAR respectfully submits that--
--The food and agricultural sector merits Federal attention and
support;
--Food and agricultural research, extension and education have paid
huge dividends in the past, not only to farmers, but to the
entire Nation and the world;
--There is an appropriate and recognized role for Federal support of
research, extension and education;
--Recent funding levels for food and agricultural research, extension
and education have been inadequate to meet pressing needs;
--Federal investments in food and agricultural research, extension
and education should be enhanced in fiscal year 2007 and
beyond; and
--The Administration should provide for expanded public
participation, including during review of programs being
considered for possible reforms or cuts.
National C-FAR appreciates the opportunity to share its views and
stands ready to work with the Chair and members of this Subcommittee
and Committee in support of these important funding objectives.
______
Prepared Statement of the National Cooperative Business Association
The National Cooperative Business Association appreciates the
opportunity to submit testimony on the importance of the Rural
Cooperative Development Grant program and the need for increased
funding. NCBA is the Nation's only national organization representing
cooperatives across all economic sectors--including agriculture,
childcare, electricity, finance, food retailing and distribution,
healthcare, housing, insurance, purchasing and shared services,
telecommunications and many others.
The Rural Cooperative Development Grant program, which NCBA helped
to establish, is the only dedicated source of Federal funding
supporting the network of more than 20 cooperative development centers
serving more than 40 States. This funding leverages much more from
State and local as well as private sources. The program also includes
money for economic research on the impact of cooperatives, research
needed to inform policymakers and cooperatives about how best co-ops
can address issues facing this Nation such as senior services and rural
housing.
Congress recognized the importance of the work of cooperative
development centers when it enacted the program in 1996 and authorized
$50 million annually to help create businesses and jobs in rural
America. In 2002, Congress reauthorized the program at the same level.
Unfortunately, chronic underfunding has limited the ability of centers
to capitalize on opportunities to revitalize rural areas. A first step
to address this problem is for this Subcommittee to appropriate $8.5
million in this year's appropriations bill and maintain the President's
funding for research on the economic impact of cooperatives.
Rural Cooperative Development Grants--Revitalizing Rural Economies
Cooperatives are businesses owned and controlled by the people who
buy their products or use their services. Tens of thousands of
cooperatives in this country range in size from small storefronts to
Fortune 500 companies. Credit unions, electric cooperatives, telephone
co-ops, agricultural cooperatives, purchasing cooperatives, and worker
cooperatives all serve the needs of millions of members.
Cooperatives represent a flexible business model that can be
developed by the community to address its economic needs. Co-ops
provide an opportunity for entrepreneurial ideas to become reality.
Since members own the cooperative, they participate in the earnings of
the cooperative. Rather than leaving the community, patronage refunds--
money paid to members based on their use in the cooperative--remains,
refueling the economy as members use their refunds to purchase goods
locally.
The Rural Cooperative Development Grants program funds the
establishment and operation of centers for rural cooperative
development to improve economic conditions in rural areas. Grants are
competitive, require a 25 percent non-Federal match in most cases, and
can be provided to nonprofits or institutions of higher education. For
the past few years, USDA has funded only half of all applications
received due to budget constraints. The program is authorized at $50
million.
Cooperative development centers are on the front lines of efforts
to revitalize struggling rural economies. They use Rural Cooperative
Development Grants to conduct feasibility studies, develop business
plans, launch new businesses, and provide education and training to
help ensure the success of these businesses. Through CooperationWorks!,
a national organization of more than 20 centers, centers share their
knowledge and experience. This network allows centers to maximize
resources, avoid duplication and bring the greatest benefit to their
communities.
The work of the centers translates into jobs and money in these
rural communities. Since the 1990s, the centers have helped start or
expand almost 400 cooperative businesses with more than 47,000 members,
creating more than 5,800 new rural jobs in virtually every sector of
the economy, including energy, housing, agriculture, forestry, food,
senior and childcare services, and health care. Investment in these
cooperatives exceeds $900 million.
The Need for Cooperative Development
Cooperative development centers address a growing need. Rural areas
in this country, especially in the Midwest, have not benefited from the
recent economic expansion. This has worsened an outmigration problem
that has ravaged the center of our country over the last few years.
For example, despite 3 years of economic expansion, 1.5 million
people were added to the poverty rolls in the Midwest between 2001 and
2004. In all non-metropolitan areas, the poverty rate has remained
stuck at 14.2 percent despite the economic recovery.
With the help of RCDG grants, cooperative development centers are
working with communities to create economic sustainability. For
example, the Georgia Cooperative Development Center helped 27 local
farmers create a co-op to get access to wholesale buyers who had
previously denied them business. The Farmers Fresh Food Network now
markets to agriculture members, local restaurants and farmers markets
and soon plans to provide local schools with fresh produce.
The Missouri Farmers Union Family Farm Opportunity Center helped
families turn seemingly profitless land into a sustainable business by
forming a co-op to mill their trees into high quality boards. Not only
are they practicing sustainable development with the project but the
estimated return to the community could jump from $35 million to $3.4
billion.
The centers also respond to communities in crises, such as those
devastated by Katrina. The Federation of Southern Cooperatives and the
Mississippi Association of Cooperatives have been working with farmers
to stabilize farms and homes destroyed by the storm, to provide
shelter, basic supplies and financial assistance. They are also working
long term to train people at their facilities and create cooperatives
that address basic economic needs of these hard-hit communities, such
as housing.
The common thread through these stories is economic sustainability
and revitalization. Substantial amounts of money generated by these
cooperatives are being put back into the local economy by members.
Cooperative Research--Filling a Gap
The number of jobs and other data collected by the cooperative
development centers and the success stories indicate that cooperatives
have great potential to address many of the problems facing rural
America. There is a serious gap, however, in the information about
cooperatives. Though economic data was collected on cooperatives many
years ago, there has been no comprehensive data collection effort to
find out the impact of all types of cooperatives on the United States
and regional economies.
The President's budget this year includes $495,000 for research on
the economic impact of cooperatives. The funding is for a cooperative
research agreement between USDA and a qualified academic institution to
direct research on the national economic impact of cooperatives. The
research can assess how cooperatives can address emerging economic
development needs in all sectors of the economy. The research funded
for fiscal year 2007 will build on the research currently underway on
the economic impact of all types of cooperatives. In addition, this
research is essential to assess the impact and cost effectiveness of
the Federal program on efforts to revitalize rural economies.
The limited studies available indicate the potential is significant
for cooperatives to address economic needs. According to the National
Co-op Month Planning Committee's ``2005 Snapshot,'' a quick survey of
co-ops, annual revenues for cooperatives are in excess of $211.9
billion. In Wisconsin, a study funded by USDA found cooperatives
supported close to 30,000 full time jobs. The South Dakota Rural
Electric Association found that the electric co-ops there generated 800
new jobs and $11 million in economic development over a 5 year period.
The Alabama Credit Union League found that their State's credit unions
generated 8,777 jobs, $288 million in household income and $24.1
million in tax receipts.
These types of studies need to be replicated on a nationwide basis
for all types of cooperatives. This country needs data such as:
--The number of jobs created by cooperatives both directly and
indirectly.
--The level of economic activity created by cooperatives.
--The tax revenue generated by the level of economic activity.
--A definitive census on the number of cooperatives and the types of
good and services that are being offered.
--The amount of patronage dividends that are returned to the members
from their cooperatives.
--The extent of the economic and social benefit where cooperatives
can meet the needs of communities that are not adequately met
by other types of businesses.
As Liz Bailey, Executive Director of the Cooperative Development
Fund noted:
We all know that there is a basic lack of understanding about
cooperatives in all levels of government, in the business community, in
the academic world, in the philanthropic world and among the general
public. Too few understand how cooperatives function and the role they
play in the Nation's economy. We all use anecdotal stories to tell of
successful cooperative enterprises, but we don't have access to the
kind of aggregated economic data that is routinely used by economic and
business analysts to map U.S. economic activity and interpret the data
for those who make or influence public policy. Government, through its
support of university research, has traditionally been the source of
this kind of basic research . . . It's also important to have data that
is continually updated. It can't be a one time snapshot . . . it's data
that needs to be tracked and reported on a regular basis. (emphasis
added) Testimony of Liz Bailey, USDA Public Meeting on Cooperative
Research Agenda, September 27, 2005
Chronic Underfunding Limits Opportunities
The need for rural economic development and cooperative development
is clear. Congress recognized the need when it developed the program:
The Managers intend to target the limited funds available for the
Rural Cooperative Development Grant program on cooperative development
centers that operate on a regional or statewide basis. By focusing this
grant program on regional centers rather than on small local projects,
the Committee hopes to link cooperatives from different communities and
different sectors of the economy to strengthen the cooperative movement
as a whole. (emphasis added) Federal Agriculture Improvement and Reform
Act of 1996, Conf.Rep., p. 432
One of the ways Congress tried ``to strengthen the cooperative
movement as a whole'' with the program was to ``emphasiz[e] job
creation in rural areas through the development of rural cooperatives,
value added processing, and rural businesses.'' (Conf.Rep., p. 431) The
centers provide a cost effective and efficient way to deliver technical
assistance that creates businesses, jobs and opportunities. But the
program's funding has not kept up with the demand, which limits both
the ability of current centers to provide assistance to create jobs and
the development of new centers to ensure national coverage.
Last year, for example, many projects that could have created jobs
and economic opportunities were denied funding. Centers with proven
track records, with business development expertise, were turned down.
Though the program serves more than 40 States, the program was intended
to cover the entire country. More funding is needed to ensure that all
States are served by a center that can address the economic and
entrepreneurial needs of the area.
Private dollars also go into cooperative development. But these
funds struggle to meet the need as well. The Cooperative Development
Fund's Mutual Service Cooperative Fund, which makes grants for
feasibility studies, educational programming and technical assistance
projects, knows how great the demand for dollars is. In 2004, with
$90,000 in available funds for grants, CDF received 44 applications
requesting a total of $980,000. In 2005 the trustees narrowed the focus
of the Fund and still received over $300,000 in proposals, 3 times the
funds available.
Cooperative development centers also would benefit from multi-year
funding. Many times efforts to develop a business are halted due to a
lack of commitment for funds in the future. Since businesses typically
take at least 3 years from concept to operation, there is great need to
have funds available during that period.
The program's recent funding history shows little to no increase in
the program over the past 5 years despite the continued growing demand.
--Fiscal year 2006--$6.5 million (includes $500,000 for research
agreement)
--Fiscal year 2005--$6 million
--Fiscal year 2004--$6.5 million
--Fiscal year 2003--$6.5 million
--Fiscal year 2002--$5.25 million
This funding also is only a small portion of the program's
authorized level of $50 million. The program's sponsors intended there
to be enough funds to address the rural economic needs of the whole
country.
Request for Increased Appropriation for RCDG
The President's fiscal year 2007 budget includes $7 million for the
RCDG program, including $495,000 for research on the economic impact of
cooperatives. We seek an increase in funding to at least $8.5 million,
which would help provide funding for four to six additional centers and
help fulfill the goal of serving all States. The $8.5 million would
also ensure that sufficient funds are available to help build the
research capacity to provide policymakers with information to assess
the value of RCDG and how cooperatives can address economic issues
facing the country. This would be a first step toward achieving the
goals Congress intended for the program. Thank you for the opportunity
to submit testimony on this important topic.
______
Prepared Statement of the National Commodity Supplemental Food Program
Association
Mr. Chairman and Subcommittee members, I am Tim Robertson,
President of the National Commodity Supplemental Food Program
Association (NCSFPA). Thank you for this opportunity to present
information regarding the Commodity Supplemental Food Program (CSFP).
CSFP was our Nation's first food assistance effort with monthly
food packages designed to provide protein, calcium, iron, and vitamins
A and C. CSFP began in 1969 for low-income mothers and children,
preceding the Special Supplemental Nutrition Program for Women,
Infants, and Children known as WIC. CSFP pilot programs in 1983 added
low-income seniors to the list of eligible participants and they now
comprise nearly 90 percent of all participants.
CSFP is a unique Federal/State and public/private effort. The USDA
purchases specific nutrient-rich foods at wholesale prices for
distribution. State agencies such as the department of health,
agriculture or education provide administration and oversight. These
agency's contract with community and faith based organizations to
warehouse and distribute food, certify eligibility and educate
participants. The local organizations build broad collaboration among
non-profits, health units, and area agencies on aging so that seniors
and others can quickly qualify for and receive their monthly
supplemental food package along with nutrition education to improve
their health and quality of life. This unique public/private
partnership reaches even homebound seniors with vital nutrition.
The foods provided through CSFP includes canned fruits and
vegetables, juices, meats, fish, peanut butter, cereals and grain
products, cheese, and other dairy products. The availability of these
goods increases healthy food consumption among these low-income
populations.
The CSFP is also an important ``market'' for commodities supported
under various farm programs, as well as an increasingly important
instrument in meeting the nutritional and dietary needs of special low-
income populations.
In fiscal year 2006, the CSFP provided services through 150 non-
profit community and faith-based organizations at over 1,800 sites
located in 32 States, the District of Columbia, and two Indian
reservations (Red Lake, Minnesota and Oglala Sioux, South Dakota). On
behalf of those organizations the NCSFPA would like to express our
concern and disappointment regarding the reduction of available CSFP
resources for fiscal year 2006.
--Congress in the fiscal year 2006 Agricultural Appropriations bill
strongly encouraged USDA to make every effort to maintain the
fiscal year 2005 caseload by making full use of CSFP inventory
and carryover from preceding years and to access all available
resources from bonus commodity holdings and CCC stocks.
--It is not clear from the ``CSFP 2006 Final Caseload Assignments''
memorandum whether USDA has made full use of all available
resources, especially since States were instructed to cut
program participation by 6.26 percent (32,902 seniors
nationally).
--The prospect of seniors not receiving needed CSFP food in a year
when USDA has forecast in excess of $35.4 million in carryover
inventory at the end of the fiscal year 2006 is disturbing.
Clearly these inventories could and should be used to serve the
full fiscal year 2006 caseload.
--Other resources such as $4 million included for CSFP Gulf Coast
operators in the defense bill, and full use of Commodity Credit
Corporation (CCC) inventory appears not to have been factored
into the CSFP 2006 final caseload assignments.
--At a time when many Americans must choose between food or their
medicine, utilities, and other basic expenses, the Federal
Government should not be reducing benefits for our most
vulnerable citizens. We respectfully request your review of
USDA's adherence to your directive in the Agriculture
Appropriation Bill.
CSFP's 36 years of service stands as testimony to the power of
partnerships among community and faith-based organizations, farmers,
private industry and government agencies. The CSFP offers a unique
combination of unparalleled advantages.
--The CSFP specifically targets our Nation's most nutritionally
vulnerable populations: seniors and young children.
--The CSFP provides a monthly selection of food packages tailored to
the nutritional needs of the population served. Eligible
participants are guaranteed [by law] a certain level of
nutritional assistance every month in addition to nutrition
education regarding how to prepare and incorporate these foods
into their diets.
--The CSFP purchases foods at wholesale prices, which directly
supports the farming community. The cost of the average food
package for fiscal year 2006 is $15.04, but the retail value is
approximately $50.00.
--The CSFP involves the entire community in confronting the problem
of hunger. There are thousands of volunteers as well as many
private companies who donate money, equipment, and most
importantly time and effort to deliver food to needy and
homebound seniors. These volunteers not only bring food but
companionship and other assistance to seniors who might have no
other source of support. (See Attachment 1)
The White House proposed budget for fiscal year 2007, released on
Monday, February 6, 2006, would eliminate the CSFP completely, and
would eliminate all of this effort and support of those 36 years. This
proposal has shocked the entire CSFP community as well as legislators,
anti-hunger and senior service organizations and concerned citizens.
America's Second Harvest, AARP, FRAC, and others have all voiced their
opposition to the elimination of CSFP. It is unconscionable to
eliminate benefits for some of our most vulnerable citizens and to
eliminate hope of those waiting for participation in the program. It is
the cruelest cut for the greatest generation.
In a recent CSFP survey, more than half of seniors living alone
reported an income of less than $750 per month. Of those respondents
from two-person households, more than half reported an income of less
than $1,000 per month. Fewer than 25 percent reported being enrolled in
the Food Stamp Program. Over 50 percent said they ran out of food
during the month. Also, close to 70 percent senior respondents say they
use money for medical bills not food.
The Senate Agriculture Appropriations Subcommittee has consistently
supported CSFP, acknowledging it as a cost-effective way of providing
nutritious supplemental foods. This year, your support is needed
urgently to provide adequate resources for the 536,196 mothers,
children and seniors currently receiving benefits, 20,500 low-income
participants currently waiting in five new States and 154,259 seniors
waiting in current States for this vital nutrition program.
There is no discernible plan to address the long-term needs of
those affected by the elimination of CSFP. The proposed transition plan
provides that seniors being removed from CSFP will be provided a Food
Stamp Program (FSP) benefit of $20 per month for up to 6 months, or
until the participant actually enrolls in the FSP, whichever comes
first. As referenced earlier, CSFP provides a food package that costs
USDA about $15 per month. It has a retail value of approximately $50.
How does someone use $20 to purchase approximately $50 worth of
nutritious foods? What happens at the end of 6 months? Simply
transferring seniors to the FSP is an inadequate solution. It is
essential for seniors to have access to services which they
feel is offered with dignity and respect. Many will outright reject
the idea of applying for FSP benefits. According to the ERS Evaluation
of the USDA Elderly Nutrition Demonstrations: Volume I:
``The Commodity alternative benefit demonstration in North Carolina
was popular both among new applicants and among existing FSP
participants. Clients eligible for low FSP benefits were more likely to
get the commodity packages, which had a retail value substantially
greater than their FSP benefits''. In particular, seniors described the
anxiety of using FSP benefits in stores, where they felt shoppers and
store clerks looked down on them. The demonstrations attracted a
particularly large share of clients eligible for the $10 benefit
because the retail value of the commodity packages was worth $60-$70''.
Depending on their non-cash assets, seniors may not qualify for a
FSP benefit level equivalent to the CSFP food package. Seniors
receiving the minimum benefit would not be eligible for the $20/month
transitional benefit. The 25 percent of current CSFP participants who
already enrolled in the FSP will lose the benefits of CSFP and those
benefits will not be replaced at a time when they are struggling to
make ends meet. CSFP and FSP are supplemental programs. They work
together to make up the shortfall that many of our seniors are facing
each month. Both programs need to be available as part of the ``safety
net'' for our low-income participants.
USDA reports that the average FSP benefit paid to senior citizens
is about $65 per month, but in reality, many senior citizens receive
only the minimum monthly benefit of $10, which has not been updated
since 1975. USDA figures also report households rather than individual
participants and include households with disabled family members.
The proposed transition plan for women, infants and children
enrolled in the CSFP is to transfer them to WIC. However, due to
increasing coordination between WIC and CSFP at the State and community
levels, the number of WIC-eligible mothers and children enrolled in the
CSFP is steadily declining. In some States, this figure is less than 2
percent of all enrolled women and children, eradicating supplemental
food and nutrition benefits for that population as well. Further, the
majority of women and children receiving CSFP food are 6 month
postpartum women and 5 year old children who are not eligible for the
WIC Program.
The National Commodity Supplemental Food Program Association
requests the Senate Agriculture Appropriations Subcommittee take the
appropriate actions to fund CSFP for fiscal year 2007 at $160 million
as illustrated below:
[Dollars in millions]
------------------------------------------------------------------------
Description People (caseload) Funding
------------------------------------------------------------------------
Maintain fiscal year 2005 Caseload 536,196............. $128.0
Requirements in Existing States.
Five New States (AK, DE, OK, NJ, 20,500.............. 3.7
UT).
Current States Senior Needs....... 154,259............. 27.6
USDA Costs for Procuring .................... .7
Commodities.
-------------------------------------
Total CSFP Request for 710,955............. 160.0
fiscal year 2007.
------------------------------------------------------------------------
With the aging of America, CSFP must be an integral part of USDA
Senior Nutrition Policy as well as comprehensive plans to support the
productivity, health, independence, and quality of life for America's
seniors.
Measures to show the positive outcomes of nutrition assistance to
seniors must be strengthened. A 1997 report by the National Policy and
Resource Center on Nutrition and Aging at Florida International
University, Miami--Elder Insecurities: Poverty, Hunger, and
Malnutrition indicated that malnourished elderly patients experience 2
to 20 times more medical complications, have up to 100 percent longer
hospital stays, and incurs hospital costs $2,000 to $10,000 higher per
stay. Proper nutrition promotes health, treats chronic disease,
decreases hospital length of stay and saves health care dollars.
Rather than eliminating the program, the NCSFPA recommends the
following initiatives to strengthen CSFP:
--Develop a formal evaluation process to demonstrate individual and
program outcomes of CSFP with Federal, State, and local CSFP
managers included in the study design.
--Restore financial guidelines for seniors to the original level of
185 percent of poverty.
--Set ``greatest need within a project area'' as the priority for
service or let each State set its priority for service under a
plan approved by the Secretary of Agriculture.
--Support and expand the program in those States that have
demonstrated an interest in the CSFP, including the 5 States
that already have USDA-approved plans to operate CSFP
(Arkansas, Delaware, New Jersey, Oklahoma, and Utah) or that
have demonstrated a willingness to continue and expand current
CSFP services.
This program continues with committed grassroots operators and
dedicated volunteers. CSFP's mission is to provide quality nutrition
assistance economically, efficiently, and responsibly always keeping
the needs and dignity of our participants first. We commend the Food
and Nutrition Service of the Department of Agriculture and particularly
the Food Distribution Division for their continued innovations to
strengthen the quality of the food package and streamline
administration. We also remain committed to providing quality services
in collaboration with the community organizations and volunteers that
contribute more than 50 percent of the resources used in providing
these services.
ATTACHMENT 1.--NATIONAL CSFP ASSOCIATION ADMINISTRATIVE EXPENSE/VALUE SURVEY FOR FISCAL YEAR 2005
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Goods & Extra Goods
USDA Not Reimbursed CSFP Services Volunteer Annual Total Percent Paid donated to
Programs Reimbursed by USDA Cash Expenditures donated to Labor Hours Program Value by USDA CSFP
Cash Cash agency Value Value participants
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
New Hampshire................................................... $425,689 $16,902 $442,591 .............. $117,370 $559,961 76 $1,668
New York........................................................ 1,896,086 85,500 1,981,586 $20,000 9,126 2,010,712 94 10,425
Vermont......................................................... 257,950 318,327 576,277 1,200 96,578 674,055 38 ..............
Washington DC................................................... 449,139 1,500,000 1,949,139 1,600,000 12,513 3,561,652 13 ..............
Pennsylvania.................................................... 834,444 147,234 981,678 332,604 234,310 1,548,592 54 278,303
Kentucky........................................................ 912,417 35,538 947,955 5,000 376,799 1,329,754 69 ..............
Mississippi..................................................... 402,779 .............. 402,779 .............. 189,540 592,319 68 ..............
North Carolina.................................................. 79,849 40,000 119,849 .............. 3,438 123,287 65 20,000
South Carolina.................................................. 215,880 113,827 329,707 66,000 98,456 494,163 44 14,500
Tennessee....................................................... 827,805 .............. 827,805 .............. .............. 827,805 100 ..............
Illinois........................................................ 903,174 3,000 906,174 .............. 341,172 1,247,346 72 ..............
Indiana......................................................... 264,831 32,020 296,851 19,440 369,603 685,894 39 100
Michigan........................................................ 4,535,044 2,237,705 6,772,749 296,000 3,696,683 10,765,433 42 577,199
Minnesota....................................................... 806,379 277,890 1,084,269 28,000 798,525 1,910,794 42 497,700
Red Lake, MN.................................................... 5,937 5,937 11,874 .............. .............. 11,874 50 ..............
Ohio............................................................ 713,807 250,997 964,804 54,800 442,629 1,462,233 49 166,590
Wisconsin....................................................... 287,026 15,000 302,026 .............. 305,370 607,396 47 79,797
Louisiana....................................................... 4,672,088 .............. 4,672,088 377,479 1,483,387 6,532,955 72 2,500
New Mexico...................................................... 1,120,106 195,000 1,315,106 78,719 231,800 1,625,625 69 1,208,353
Texas........................................................... 706,534 85,000 791,534 1,500 115,830 908,864 78 12,000
Colorado........................................................ 1,196,217 425,963 1,622,180 13,375 174,254 1,809,809 66 650,425
Iowa............................................................ 228,563 286,543 515,106 .............. 67,247 582,353 39 108,510
Kansas.......................................................... 342,332 69,019 411,351 329,960 255,881 997,192 34 81,424
Missouri........................................................ 539,700 109,072 648,772 2,000 398,455 1,049,227 51 ..............
Montana......................................................... 81,528 29,649 411,177 115,929 515,022 1,042,128 37 37,800
Nebraska........................................................ 761,247 116,207 877,454 46,449 276,044 1,199,947 63 74,960
North Dakota.................................................... 161,155 43,208 204,363 .............. 192,594 396,957 41 1,695
South Dakota.................................................... 161,911 5,005 166,916 36,875 87,785 291,576 56 12,480
Oglala Sioux, SD................................................ 37,779 .............. 37,779 .............. .............. 37,779 100 ..............
Alaska.......................................................... 138,798 .............. 138,798 .............. 35,100 173,898 80
Arizona......................................................... 968,788 640,636 1,609,424 442,950 1,030,066 3,082,440 31 655,000
California...................................................... 3,095,354 1,036,699 4,132,053 242,424 3,532,078 7,906,555 39 588,868
Nevada.......................................................... 401,133 16,000 417,133 2,000 1,123 420,256 95 4,000
Oregon.......................................................... 72,603 .............. 72,603 .............. .............. 72,603 100 ..............
Washington...................................................... 134,426 31,000 165,426 12,600 6,318 184,344 73 ..............
-------------------------------------------------------------------------------------------------------------------------------
Grand Total............................................... 28,938,498 8,168,878 37,107,376 4,125,304 15,495,096 56,727,776 51 5,084,297
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Prepared Statement of the National Turfgrass Evaluation Program
Mr. Chairman and Members of the Subcommittee: On behalf of the
National Turfgrass Evaluation Program (NTEP), I appreciate the
opportunity to present to you the turfgrass industry's need and
justification for continuation of the $490,000 appropriated in the
fiscal year 2006 budget for turfgrass research within the Agricultural
Research Service (ARS) at Beltsville, MD. Secondly, we ask that the
committee support and accept the $1,880,000 for Drought Mitigation in
the President's budget request. This funding will be used by ARS to
conduct turfgrass water conservation and salinity research at Phoenix,
AZ and Riverside, CA. Thirdly, to implement the most critical needs
within the National Turfgrass Research Initiative, we are asking for
five individual research positions of $450,000 each. This amount is
being requested by senators in the states where the positions are
located. We appreciate the support of research funding at Beaver, WV
($330,000) provided by the committee in fiscal year 2006 and request
that funding be restored in fiscal year 2007. All funding provided by
the Committee is requested to go directly to ARS/Beltsville, not the
industry per se.
Restoration of funding for the existing ARS Scientist Position and
related support activities at Beltsville, MD ($490,000)
NTEP and the turfgrass industry are requesting the Subcommittee's
support for $490,000 to continue funding for the full-time scientist
staff position within the USDA, ARS at Beltsville, MD, focusing on
turfgrass research, that was provided by the Committee in the fiscal
year 2006 budget, and in the four previous budget cycles. We consider
this funding our Congressional ``baseline'', i.e. that funding which is
central to and critical for the mission of the National Turfgrass
Research Initiative. We are very grateful for this support and hope the
Committee will continue this funding.
Turfgrass provides multiple benefits to society including child
safety on athletic fields, environmental protection of groundwater,
reduction of silt and other contaminants in runoff, and green space in
home lawns, parks and golf courses. Therefore, by cooperating with
NTEP, USDA has a unique opportunity to take positive action in support
of the turfgrass industry. While the vast majority of the USDA's funds
have been and will continue to be directed toward traditional ``food
and fiber'' segments of U.S. agriculture, it is important to note that
turfgrasses (e.g., sod production) are defined as agriculture in the
Farm Bill and by many other departments and agencies. It should also be
noted that the turfgrass industry is the fastest growing segment of
U.S. agriculture, while it receives essentially no federal support.
There are no subsidy programs for turfgrass, nor are any desired.
For the past 70 years, the USDA's support for the turfgrass
industry has been modest at best. The turfgrass industry's rapid
growth, importance to our urban environments, and impact on our daily
lives warrant more commitment and support from USDA.
A new turfgrass research scientist position within USDA/ARS was
created by Congress in the fiscal year 2001 budget. Additional funding
was added in fiscal year 2002 with the total at $490,000. A research
scientist was hired, and is now working at the ARS, Beltsville, MD
center. A research plan was developed and approved by ARS. This
scientist has used the funding for a full-time technician, equipment
and supplies to initiate the research plan and for collaborative
research with universities. We have an excellent scientist in place,
and he is making good progress in establishing a solid program. At this
point, losing the funding for the position would be devastating to the
turf industry, as significant research has begun.
Support the President's budget request for Drought Mitigation research
as proposed by ARS (See ARS Explanatory Notes, pages 10-82, 10-
83) ($1,880,000)
The turfgrass industry is excited that for the first time, the
President's budget contains funding for turfgrass research within ARS.
This funding will be used to hire scientists in two very important
locations, Riverside, CA and Phoenix, AZ, focusing on water
conservation, wastewater reuse and salinity research. These issues are
the most critical research needs for the survival of the turf industry.
Following is a brief description of the research that ARS will conduct
with this funding:
ARS will:
Develop Technology and Management Systems to Use Non-Potable Water
to Reduce Agriculture's Vulnerability to Drought ($1,880,000 Total).--
In the process, ARS will develop systems to safely reuse wastewater and
low-quality water as a means of irrigating agricultural, horticultural
and turf-based enterprises in an environmentally and economically
sustainable manner
As noted in USDA's Explanatory Notes accompanying this budget
request, this funding will be directed to the following two critical
locations:
Phoenix, AZ, ($940,000)
The U.S. Water Conservation Lab in Phoenix will determine the on-
site impacts and movement in the air, soil, plant, and ground water of
biological and chemical substances contained in treated and untreated
waste water used for irrigation of turfgrass. They will also develop
irrigation technologies and management systems to mitigate the impact
of elevated levels of these compounds and nutrients when wastewater is
used in the production of turf and specialty crops.
Riverside, CA, ($940,000)
This research will be conducted at the world-renowned U.S. Salinity
Lab. The Riverside lab will focus on the development of new irrigation
technologies and systems to either mitigate or manage the effect of
saline irrigation on the production of turf and specialty crops.
Request funding of Congressional earmarks for five ARS scientist
positions at four ARS installations @ $450,000 each (Total:
$2,250,000)
The turfgrass industry also requests that the Subcommittee
appropriate an additional $2,250,000 for the National Turfgrass
Research Initiative. This Initiative has been developed by USDA/ARS in
partnership with the turfgrass industry. We are asking for five
priority research positions at four locations across the United States.
These five positions address the most pressing research needs, namely
water use/efficiency and environmental issues. $450,000 is being
requested for each location.
The USDA needs to initiate and maintain ongoing research on
turfgrass development and improvement for the following reasons:
The value of the turfgrass industry in the United States is $40
billion annually. There are an estimated 50,000,000 acres of turfgrass
in the United States. Turfgrass is the number one or two agricultural
crop in value and acreage in many States (e.g., MD, PA, FL, NJ, NC).
As our society becomes more urbanized, the acreage of turfgrass
will increase significantly. In addition, State and local
municipalities are requiring the reduction of water, pesticides and
fertilizers on turfgrass. However, demand on recreational facilities
will increase while these facilities will still be required to provide
safe turfgrass surfaces.
Currently, the industry itself spends about $10 million annually on
applied and proprietary turfgrass research. However, private and
university research programs do not have the time nor the resources to
conduct basic research and to identify completely new sources of
beneficial genes for stress tolerance. ARS turfgrass scientists will
enhance the ongoing research currently underway in the public and
private sectors. Because of its mission to conduct the Nation's
research for agricultural commodities, ARS is the proper delivery
system for this research.
Water management is a key component of healthy turf and has direct
impact on nutrient and pesticide losses into the environment.
Increasing demands and competition for potable water make it necessary
to use water more efficiently. Also, drought situations in many regions
have limited the water available and, therefore, have severely impacted
the turf industry as well as homeowners and young athletes. Therefore,
new and improved technologies are needed to monitor turf stresses and
to schedule irrigation to achieve the desired quality. Technologies are
also needed to more efficiently and uniformly irrigate turfgrasses.
Drought tolerant grasses need to be developed. In addition, to increase
water available for irrigation, waste water (treated and untreated)
must be utilized. Some of these waste waters contain contaminants such
as pathogens, heavy metals, and organic compounds. The movement and
accumulation of these contaminants in the environment must be
determined.
USDA conducted significant turfgrass research from 1920-1988.
However, since 1988, no full-time scientist has been employed by USDA,
Agricultural Research Service (ARS) to conduct turfgrass research
specifically, until the recently appropriated funds became available.
ARS and the turfgrass industry enjoy a special, collaborative
relationship, and have even entered into a cooperative Memorandum of
Understanding (MOU). The turfgrass industry has met on numerous
occasions with USDA/ARS officials to discuss the new turfgrass
scientist positions, necessary facilities, and future research
opportunities. In January 2002, ARS held a customer workshop to gain
valuable input from turfgrass researchers, golf course superintendents,
sod producers, lawn care operators, athletic field managers and others
on the research needs of the turfgrass industry. As a result of the
workshop, ARS and the turfgrass industry have developed the National
Turfgrass Research Initiative. The highlights of this strategy are as
follows:
ARS, as the lead agency at USDA for this initiative, has graciously
devoted a significant amount of time to the effort. Like the industry,
ARS is in this research endeavor for the long-term. To ARS' credit, the
agency has committed staff, planning and technical resources to this
effort. This year is the first time ARS has been able to include some
funding in the President's budget for the Turfgrass Research
Initiative. However, there are so many issues and needs, that the
industry is desperate for answers. Thus, to address the critical
research needs, the industry is left with no alternative but to come
directly to Congress for assistance through the appropriations process.
The role and leadership of the Federal Government and USDA in this
research are justifiable and grounded in solid public policy rationale.
ARS is poised and prepared to work with the turfgrass industry in this
major research initiative. However, ARS needs additional resources to
undertake this mission.
The turfgrass industry is very excited about this new proposal and
wholeheartedly supports the efforts of ARS. Since the customers at the
workshop identified turfgrass genetics/germplasm and water quality/use
as their top priority areas for ARS research, for fiscal year 2007, the
turfgrass industry requests that the following positions be established
within USDA/ARS:
------------------------------------------------------------------------
------------------------------------------------------------------------
Position 1: Component II: Germplasm: Molecular $450,000
Biologist: Southwest--Lubbock, TX
Position 2: Component I: Water: Agricultural Engineer-- 450,000
Irrigation: Transition Zone--Florence, SC
Position 3: Component IV: Environment: Agricultural 450,000
Engineer--Fate & Transport: Northeast--University Park,
PA
Position 4: Component III: Pest Management: Weed 450,000
Scientist: Northeast--University Park, PA
Position 5: Component II: Germplasm: Geneticist-- 50,000
Biodiversity: Upper West--Logan, UT
---------------
Total............................................. 2,250,000
------------------------------------------------------------------------
For this research we propose an ARS-University partnership, with
funding allocated to ARS for in-house research as well as in
cooperation with university partners. For each of the individual
scientist positions, we are requesting $300,000 for each ARS scientist
position with an additional $150,000 attached to each position to be
distributed to university partners, for a total of $450,000 per
position. We are also asking that the funding be directed to ARS and
then distributed by ARS to those university partners selected by ARS
and industry representatives.
Request restoration of funding for the ARS lab in Beaver, WV that was
appropriated in fiscal year 2006 ($330,000)
In the last 2 fiscal years, the Subcommittee has generously
provided funding for turfgrass research at the Appalachian Farming
Systems Research Center in Beaver, WV. The Subcommittee allocated
$150,000 in fiscal year 2005 and an additional $180,000 in fiscal year
2006, bringing the total to $330,000. As the Beaver lab has expertise
in soils research, the turf industry has embraced this funding and the
research possibilities. The turf industry is now working with the lab
to construct a research program on soil issues that affect turfgrass
production. This research fits very nicely within the framework of the
National Turfgrass Research Initiative. Therefore, we appreciate the
support of the Subcommittee for this new funding in the last 2 fiscal
years and ask for your continued support of that funding in fiscal year
2007.
In addition, the Committee should be receiving Member requests for
funding of each of the five positions described above. We appreciate
your strong consideration of each individual member request for the
turfgrass research position in his or her respective state.
In conclusion, on behalf of the National Turfgrass Evaluation
Program and the turfgrass industry across America, I respectfully
request that the Subcommittee continue the funding appropriated in
fiscal year 2006 for Beltsville, MD, ($490,000) and Beaver, WV
($330,000) within the Agricultural Research Service. I also request
that the committee support the President's budget request of $1,880,000
for Drought Mitigation. Finally, I request that the Subcommittee
appropriate an additional $2,250,000 for five new turfgrass scientist
positions around the country, with $450,000 provided for each location.
Thank you very much for your assistance and support.
______
Prepared Statement of the National Fish and Wildlife Foundation
Mr. Chairman and Members of the Subcommittee: I appreciate the
opportunity to submit testimony regarding the fiscal year 2007 funding
request for the National Fish and Wildlife Foundation (Foundation).
Included in this testimony is a summary of our history and fiscal year
2005 accomplishments, as well as the new and innovative programs we
hope to accomplish with the funding provided by this Committee.
Congress established the Foundation 22 years ago, and since that
time the Foundation's vision for more healthy and abundant populations
of fish, wildlife and plants has flourished through the creation of
numerous valuable partnerships. The breadth of our partnerships is
highlighted through our active agreements with 14 Federal agencies, as
well as various corporations, foundations and individual grantees.
Through these unique arrangements, we are able to leverage Federal
funds, bring agencies and industry together and produce tangible,
measurable results. Our history of collaboration has given way to
programs and initiatives such as the North American Waterfowl
Management Plan, the Neotropical Migratory Bird Conservation Program,
the Chesapeake Bay Small Watershed Grants Program and the Pulling
Together Initiative. With the support of the Committee in fiscal year
2007, we can continue to uphold our mission of enriching fish, wildlife
and the habitat on which they depend.
Federal dollars appropriated by this Committee allow the Foundation
to be highly successful in assisting the Natural Resources Conservation
Service (NRCS) in accomplishing its mission to help people conserve,
maintain and improve our natural resources and environment. Whether it
involves farm, range or grassland conservation, species management or
conservation education, the Foundation strategically invests the
Federal funds entrusted to us in sound projects. The Foundation
respectfully requests that this Subcommittee fund the Foundation at $4
million through the U.S. Natural Resources Conservation Service
Appropriation.
This request would allow the Foundation to expand its highly
successful grant program to better assist NRCS in maximizing private
land conservation.
Since the grants partnership began in 2000, the Foundation has
received $18 million in NRCS Federal funds ($3 million per fiscal
year), which it has dedicated to a matching grant program focused on
private land conservation. The Foundation has supported over 400
projects in 49 states by leveraging the $18 million in NRCS funds into
more than $75 million in on-the-ground conservation. These projects
have led to the direct restoration of more than 200,000 acres of
farmland and rangeland and 775 miles of streams and rivers. In fiscal
year 2005, the Foundation received $3 million in NRCS Federal funds,
which it leveraged into more than $12 million in on-the-ground
conservation. With the funds provided by the Committee in fiscal year
2006, we are on track to successfully continue leveraging NRCS funds to
increase on-the-ground conservation benefits.
The Foundation's achievements are based on a competitive grant
process where Federal funds are matched by the grantee with non-Federal
funds and in-kind services. Grantees include Resource Conservation and
Development Areas, conservation districts, universities and non-profit
organizations who partner with farmers and ranchers to support
conservation efforts on private land. The Foundation also works to
further maximize Federal funds by providing private funds through the
generosity of our growing number of corporate and foundation partners.
These funds are in addition to the non-Federal funds that are provided
by the Foundation's grantees. In the Foundation's partnership with
NRCS, Federal funds have been supplemented with funding from Shell Oil
Company, FMC Corporation, Anheuser-Busch Companies, Inc., Southern
Company, Summer T. McKnight Foundation, Charles Stewart Mott
Foundation, William Penn Foundation and the David and Lucile Packard
Foundation. The Foundation is also pleased to report that the Kellogg
Foundation has agreed to a multi-year partnership beginning in fiscal
year 2006 to further the Foundation's agriculture conservation work.
Working Landscapes.--Through our partnership, the Foundation works
with NRCS to identify and fund projects that have strong support in
affected agricultural and rural communities. We place our highest
priority on projects integrating conservation practices on ongoing
agricultural, ranching and forestry operations with the goal of
improving the ecological health of working lands. We fund partners and
provide expertise by engaging watershed experts, ranchers, foresters,
farmers, local governments and non-profits to undertake on-the-ground
private land activities with willing landowners. Through these efforts,
the Foundation has helped to reduce agricultural runoff, remove
invasive species and restore native ecosystems.
Conserving Fish, Wildlife and Plants.--With our NRCS dollars, the
Foundation funds projects that directly benefit diverse fish and
wildlife species, including salmon in the West, migratory birds in the
Midwest and grassland birds in the South. Habitat for native fish has
been restored on private lands throughout the United States through
vegetative planting, streambank stabilization, livestock fencing and
nutrient reduction efforts. In addition to improving water quality,
efforts have been undertaken by our grantees to reduce water loss
caused by invasive species or from outdated irrigation systems. By
reducing the water taken from rivers, there is less chance that drought
will negatively impact aquatic life.
We also measure our success, in part, by preventing the listing of
species under the Endangered Species Act and by stabilizing and
hopefully moving others off the list. Some species that have received
support through our NRCS grant program include salmonids, golden-
cheeked warblers, black-capped vireos, Southwestern willow flycatchers,
whooping cranes, sage grouse, lesser prairie chickens, aplomado
falcons, black-tailed prairie dogs, Louisiana black bears, bog turtles,
tiger salamanders and Karner blue butterflies. We invest in common
sense and innovative cooperative approaches to endangered species,
building bridges between the government and the private sector.
Expanding Conservation Education Opportunities.--Our grantees also
use our NRCS dollars to expand conservation education opportunities. Of
our fiscal year 2005 NRCS partnership grants, over one-fourth contained
an environmental education or outreach component. Some of the
conservation education projects supported through our NRCS grant
program seek to educate farmers and ranchers on conservation practices,
while demonstrating how best management practices and wildlife
incentives provide both environmental and economic benefits. Other
projects have provided training to secondary school teachers on the
ecological, economic and cultural benefits of rangeland and farmland
conservation.
Special Grant Programs.--In fiscal year 2005, NRCS joined the
Foundation's Pulling Together Initiative, a grant program that supports
the creation of local cooperative Weed Management Area partnerships.
These partnerships bring together local landowners, citizens groups and
weed experts to develop and implement strategies for managing weed
infestations on public lands, natural areas and private working lands.
Through this collaborative program, NRCS staff is able to join invasive
species experts from the U.S. Fish and Wildlife Service, USDA-Forest
Service, Bureau of Land Management, Animal and Plant Health Inspection
Service and the Department of Defense to review and jointly select the
most innovative weed management projects. This collaborative model has
proven so successful that in late fiscal year 2005, the Foundation
launched a new strategically focused grant program targeting the Great
Lakes Watershed. The partners in this program include the Environmental
Protection Agency, U.S. Fish and Wildlife Service, National Oceanic and
Atmospheric Administration and the USDA-Forest Service. The Foundation
is currently in discussions with NRCS regarding their formal
participation in the program for the next grant cycle.
The Foundation is currently developing two additional Special Grant
Programs that will be launched later this year. The purpose of the
first grant program is to implement the National Fish Habitat
Initiative Action Plan. The National Fish Habitat Initiative is a
multi-agency, multi-partner initiative to improve our Nation's aquatic
resources. The Foundation's grant program will bring together Federal
and non-Federal funds to strategically invest in priority fish habitat
grants. The Foundation's second grant program will focus on the Upper
Mississippi River Watershed. The program is being launched at the
direction of the USDA-Forest Service with the goal of restoring private
land streambanks with native trees and grasses. The Foundation is
hoping to expand this program into a multi-partnered effort in fiscal
year 2007.
Evaluation.--The Foundation has become a leader in evaluation and
adaptive management among its peers. The Foundation's goal is to build
the capacity of both itself and its partners to undertake more
effective evaluation, to assist in both measuring performance and
adapting methods and funding strategies for more effective
conservation. To address these goals, the Foundation is implementing
several evaluation strategies simultaneously. First, the Foundation has
instituted new protocols within its application process to provide the
measurable indicators needed to evaluate the impacts of our programs.
Second, the Foundation has convened discussions among our agencies
partners to identify and coordinate potential opportunities for
collaboration within evaluation. One of the initial results of these
meetings has been an interest in piloting new evaluation indicators, to
better articulate the Federal investment for GPRA and PART
requirements.
Third, the Foundation has commissioned several third-party
evaluations targeting standard methods like culvert removal to full
program evaluations to learn where we have been successful and where
past methods have not provided the desired impact. As an example, in
fiscal year 2006, the Foundation's Chesapeake Bay Small Watershed
Grants Program will be evaluated for the first 5 years of grant-making.
The evaluation will include 355 projects associated with about $10.6
million in Federal funds. The Federal legislation accompanying this
program included 10-year goals, and this evaluation presents an
opportunity to assess the mid-way mark in helping the Foundation and
its partners better focus their resources over the next 5 years. To
capture the evaluations and lessons learned, the Foundation is taking a
fourth key step by developing a new searchable project website where
users will be able to query information and learn more about funded
projects, including how to adapt projects for higher rates of success.
Continued Need.--The Foundation is uniquely positioned to continue
assisting NRCS in implementing beneficial conservation practices on our
Nation's farms and ranches by leveraging NRCS's scarce Federal
resources to maximize on-the-ground conservation benefits. The
Foundation's matching grant program has the flexibility to address many
agricultural conservation needs. These include, but are not limited to,
increasing instream flow for rivers while continuing to support
agricultural irrigation, promoting the recovery of specific threatened
or endangered animals on private lands, implementing critical
conservation practices on private lands that do not qualify for funding
under a Farm Bill program, working with non-traditional partners such
as the Amish and Mennonites and by forging broad community-based
partnerships. Additional resources are needed in fiscal year 2007 to
continue meeting the growing demand for private land conservation,
while expanding the participation of NRCS into new multi-partner
programs.
Accountability and Grantsmanship.--The Foundation constantly
strives to improve the grant making process while maintaining a healthy
level of oversight. To improve ease of use for potential applicants,
Foundation applications are now completed and reviewed electronically.
In early 2006, to further improve efficiency, the Foundation released a
revised application, grant contract template and reporting form. Even
with these efficiencies, the Foundation still requires strict financial
reporting by grantees and has once again received an unqualified audit
in fiscal year 2005.
In addition to the evaluation requirements described earlier, all
potential grants are subject to a peer review process. This involves
five external reviews representing state agencies, Federal agencies,
affected industry, environmental non-profits and academics. Before
being recommended to the Foundation's Board of Directors, grants are
also reviewed internally by staff, including our conservation
scientists. The internal review process examines the project's
conservation need, technical merit, the support of the local community,
the variety of partners and the amount of proposed non-Federal cost
share. The Foundation also provides a 30-day notification to the
Members of Congress for the congressional district and state in which a
grant will be funded, prior to making a funding decision.
Basic Facts About the Foundation.--The Foundation is governed by a
25-member Board of Directors, appointed by the Secretary of the
Interior and in consultation with the Secretary of Commerce. At the
direction of Congress, the Board operates on a nonpartisan basis.
Directors do not receive any financial compensation for service on the
Board; in fact, all of our directors make financial contributions to
the Foundation. It is a diverse Board, representing the corporate,
philanthropic and conservation communities; all with a tenacious
commitment to fish and wildlife conservation. I took over the
chairmanship in January, after serving on the Board for 10 years. It is
an honor to lead such a prestigious board.
The National Fish and Wildlife Foundation continues to be one of,
if not the most, cost-effective conservation programs funded in part by
the Federal government. Since our inception in 1984 through fiscal year
2005, the Foundation has supported over 8,190 grants and leveraged $339
million in Federal funds into more than $1 billion in on-the-ground
conservation. None of our Federally appropriated funds are used for
lobbying, litigation or the Foundation's administrative expenses. By
implementing real-world solutions with the private sector while
avoiding regulatory or advocacy activity, our approach is more
consistent with this Congress' philosophy than ever before. We are
confident that the money you appropriate to the Foundation will
continue to make a difference.
______
Prepared Statement of the National Organic Coalition
Chairman Bennett, Ranking Member Kohl, and Members of the
Subcommittee: My name is Steven Etka. I am submitting this testimony on
behalf of the National Organic Coalition (NOC) to detail our requests
for fiscal year 2007 funding for several USDA marketing, research, and
conservation programs of importance to organic agriculture.
The National Organic Coalition (NOC) is a national alliance of
organizations working to provide a voice for farmers, ranchers,
environmentalists, consumers and others involved in organic
agriculture. The current members of NOC are the Center for Food Safety,
Rural Advancement Foundation International-USA, National Cooperative
Grocers Association, and the Northeast Organic Farming Association-
Interstate Council.
We urge the Subcommittee's strong consideration of the following
funding requests for various USDA programs of importance to organic
farmers, marketers and consumers:
USDA/Agricultural Marketing Service (AMS)
National Organic Certification Cost-Share Program Request:
$1.5 million
In recognition of the costs to farmers and handlers associated with
the process of organic certification, the National Organic
Certification Cost Share program was authorized by Section 10606 of the
Food Security and Rural Investment Act of 2002. In fiscal year 2002
initial funding of $5 million was provided for this program through the
Commodity Credit Corporation (CCC) to AMS. The assistance provided by
this program has been particularly critical to small-to-medium scale
farmers and handlers struggling with the costs of mandatory organic
certification and required annual updates. Unfortunately, the initial
CCC funding for this program has been fully expended. Therefore, we are
seeking stop-gap funding of $1.5 million from the CCC to keep the
program running until the program can be reauthorized.
Organic Standards Request: 3.13 million
In fiscal year 2006, Congress specified funding of $2.026 million
for the AMS category of ``Organic Standards.'' In the President's
fiscal year 2007 budget submittal, a request was made for $3.13 million
for AMS ``Organic Standards.'' We support the President's budget, in
order to provide the National Organic Program with greater resources
for certifier training, National Organic Standards Board support,
enforcement, and public outreach and education on upcoming rulemaking
processes.
For several years, report language has been included in the Senate
report strongly urging the National Organic Program to take action on
several unfulfilled statutory requirements. Specifically, the Senate
report language in fiscal years 2004, 2005, and 2006 called on the NOP
to hire an Executive Director for the National Organic Standards Board
and to establish an on-going Peer Review Panel, as called for in OFPA,
to provide oversight and advice to the NOP regarding the accreditation
process for organic certifiers.
While progress has been slow in complying with these statutory
requirements, the members of the National Organic Coalition are very
pleased that an Executive Director for the National Organic Standards
Board has been hired by USDA. This position is critical in helping the
NOSB fulfill its statutory role, especially at time of such heavy
workload for the Board. We congratulate the NOP for taking this action.
In contrast, the requirements of Section 2117 of OFPA to establish
a Peer Review Panel and the further requirement of Section 205.509 of
the Organic rule to establish an annual Peer Review Panel have not been
met by the NOP. However, we are pleased that the NOP contracted with
the American National Standards Institute (ANSI) to perform an outside
audit of the NOP, the results of which were presented in late 2004. The
ANSI audit noted numerous technical and procedural deficiencies in the
NOP's operations and suggested corrective actions in several areas. In
addition, USDA's own Inspector General's office released an audit
report regarding the National Organic Program in July of 2005, which
was very critical of the National Organic Program's operations, and
also suggested several corrective actions that could be taken by the
Agency to resolve the problems. The Members of the National Organic
Coalition concur with the recommendations of the ANSI and Office of
Inspector General (OIG) audits, and believe that if the NOP were to
implement these recommendations, it would be a significant step to
resolving many of the concerns that have been raised by the organic
community regard the NOP's operations.
Recently, a new National Organic Program Director was hired with
significant expertise in the area of quality systems management and ISO
compliance. We are very encouraged that the new Director's expertise
will be helpful in guiding the NOP in implementing the ANSI and OIG
audit recommendations. However, we also believe that the House and
Senate Agriculture Appropriations Subcommittees should be kept informed
by NOP with regular reports on their progress in complying with these
recommendations. Therefore, in addition to supporting the
Administration's budget request of $3.13 million for AMS/organic
standards, we are requesting that the following report language be
included:
The Committee is encouraged that the Agency has hired an Executive
Director for the National Organic Standards Board (NOSB), as well as a
new Director for the National Organic Program. The Committee also notes
that the audits performed by the American National Standards Institute
(ANSI) in 2004 and by the USDA Office of Inspector General (OIG) in
2005 made strong recommendations about changes needed in the
administration of the National Organic Program. The Committee expects
the Agency to take the necessary actions to comply with these
recommendations, and to provide a written report to the Committee by
December of 2006 regarding the progress in implementing these
recommendations. In addition, the Committee expects a report regarding
the complaints that the NOP has received about violations of the
organic standards, and the progress of the Agency in investigating and
responding to those complaints. Finally, the Committee expects the NOP
to work closely with the NOSB to implement the Peer Review Panel
requirements of OPFA and USDA's organic regulations.
USDA
Organic Data Initiatives
Authorized by Section 7407 of the 2002 Farm Bill, the Organic
Production and Marketing Data Initiative States that the ``Secretary
shall ensure that segregated data on the production and marketing of
organic agricultural products is included in the ongoing baseline of
data collection regarding agricultural production and marketing.'' As
the organic industry matures and grows at a rapid rate, the lack of
national data for the production, pricing, and marketing of organic
products has been an impediment to further development of the industry
and to the effective functioning of many organic programs within USDA.
Because of the multi-agency nature of data collection within USDA, the
effort to improve organic data collection and analysis must also be
undertaken by several different agencies within the Department:
Economic Research Service (ERS)
Collection and Analysis of Organic Economic Data Request:
$750,000
In fiscal year 2006, Congress appropriated $500,000 to USDA's
Economic Research Service to continue the collection of valuable
acreage and production data, as required by Section 7407 of the 2002
farm bill. Because increased ability to conduct economic analysis for
the organic farming sector is greatly needed, we request $750,000 to be
appropriated to the USDA ERS to implement the ``Organic Production and
Market Data Initiative'' included in Section 7407 of the 2002 farm
bill.
Agricultural Marketing Service (AMS)
Organic Price Collection Request: $1 million
Accurate, public reporting of agricultural price ranges and trends
helps to level the playing field for producers. Wholesale and retail
price information on a regional basis is critical to farmers and
ranchers, but organic producers have fewer sources of price information
available to them than conventional producers. Additionally, the lack
of appropriate actuarial data has made it difficult for organic farmers
to apply for and receive equitable Federal crop insurance. AMS Market
News is involved in tracking product prices for conventional
agricultural products, and with funding, could broaden their efforts to
include organic price data as well. We request $1 million to be
appropriated to the USDA Agricultural Marketing Service for collection
of organic price information.
National Agriculture Statistics Service (NASS)
Census Follow-up/Organic Grower Survey Request: $1 million
The mission of USDA's National Agricultural Statistics Service
(NASS) is to provide timely, accurate, and useful statistics in service
to U.S. agriculture. NASS is making an effort to expand the quantity of
organic questions in the 2007 census. However, they will need to
conduct a follow-up survey to collect more in-depth information on
acreage, yield/production, inventory, production practices, sales and
expenses, marketing channels, and demographics. Therefore, we are
requesting $1 million for USDA NASS.
USDA/CSREES
Organic Transitions Program Request: $5 million
The Organic Transition Program, funded through the CSREES budget,
is a research grant program that helps farmers surmount some of the
challenges of organic production and marketing. As the organic industry
grows, the demand for research on topics related to organic agriculture
is experiencing significant growth as well. The benefits of this
research are far-reaching, with broad applications to all sectors of
U.S. agriculture, even beyond the organic sector. Yet funding for
organic research is minuscule in relation to the relative economic
importance of organic agriculture and marketing in this nation.
The CSREES Organic Transition Program was funded at $2.1 million in
fiscal year 2003, $1.9 million in fiscal year 2004, and $1.88 million
for both fiscal years 2005 and 2006. Given the rapid increase in demand
for organic foods and other products, and the growing importance of
organic agriculture, the research needs of the organic community are
expanding commensurately. Therefore, we are requesting that the program
be funded at $5 million in fiscal year 2007. In addition, we are
requesting that the Organic Transition Program remain a separate
program, and not be subsumed within the National Research Initiative,
as proposed in the President's budget.
USDA/CSREES
National Research Initiative (NRI) Request: Language
directing CSREES to add a new NRI program area to
foster classical plant and animal breeding
In recent decades, public resources for classical plant and animal
breeding have dwindled, while resources have shifted toward genomics
and biotechnology, with a focus on a limited set of major crops and
breeds. Unfortunately, this shift has significantly curtailed the
public access to plant and animal germplasm, and limited the diversity
of seed variety and animal breed development. This problem has been
particularly acute for organic and sustainable farmers, who seek access
to germplasm well suited to their unique cropping systems and their
local environment. Without renewed funding in this arena, the public
capacity for plant and animal breeding will disappear.
In both of fiscal years 2005 and 2006, the Senate Agriculture
Appropriations Subcommittee included report language raising concerns
about this problem, and urging CSREES to give greater consideration to
research needs related to classical plant and animal breeding, when
setting priorities within the National Research Initiative. Despite
this report language, research proposals for classical plant and animal
breeding that have sought NRI funding in the past couple of years have
been consistently declined. Further, the shift in NRI toward work on
genomics and biotechnology continues, to the exclusion of classical
plant and animal breeding.
As the nation's preeminent agricultural competitive grants program,
the National Research Initiative should be funding classical plant and
animal breeding activities. The NRI currently has over 30 program areas
of focus. We are requesting that an additional program area be created
within the NRI to foster this important research, and that this new
program area be entitled, ``Classical Plant and Animal Breeding to
Foster More Diverse, Energy Efficient and Environmentally Sustainable
Agricultural Systems.''
USDA/CSREES
Sustainable Agriculture Research Request: $15 million
(Chapter 1) and Education (SARE) and $5 million
(Chapter 3)
The SARE program has been very successful in funding on-farm
research on environmentally sound and profitable practices and systems,
including organic production. The reliable information developed and
distributed through SARE grants have been invaluable to organic
farmers. We are requesting $15 million for Chapter 1 and $5 million for
Chapter 3 for fiscal year 2007.
USDA/Rural Business Cooperative Service Appropriate Technology Transfer
for Rural Areas (ATTRA) Request: $3.1 million
ATTRA is a national sustainable agriculture information service,
which provides practical information and technical assistance to
farmers, ranchers, Extension agents, educators and others interested in
sustainable agriculture. ATTRA interacts with the public, not only
through its call-in service and website, but also provides numerous
publications written to help address some of the most frequently asked
questions of farmers and educators. Much of the real-world assistance
provided by ATTRA is extremely helpful to the organic community. As a
result, the growth in demand for ATTRA services has increased
significantly, both through the website-based information services and
through the growing requests for workshops. We are requesting $3.1
million for ATTRA for fiscal year 2007, representing a $600,000
increase over fiscal year 2005 and fiscal year 2006 levels. These funds
would be used to initiate a Farm Energy Initiative, to respond to the
high demand for information and technical assistance from farmers about
ways to increase their energy efficiency in response to high energy
costs.
USDA/ARS
Strategic Regional Programming for Organic Agricultural
Research Request: $10 million, divided between
regions
In 2005, USDA-ARS spent about $3.5 million on organic-specific
projects, or about 0.35 percent of the overall ARS budget for fiscal
year 2005. Given its growing importance in the overall agricultural
economy, the commitment by ARS to organic research must be greatly
enhanced.
Distributed among the 7 Regional Areas and the ARS National Program
Office, this funding would provide needed flexibility to better address
the broad needs and opportunities of the organic production and
processing sector. Funding will be allocated by the Area Directors to:
(1) maintain and enhance existing CRIS projects, scientists and
technicians whose objectives are specific to organic production and
processing; and (2) provide support to integrate organic agriculture
objectives into other projects, when such capacity exists.
USDA/NRCS
Conservation Security Program Request: No Funding
Limitation
USDA/Rural Business Cooperative Service
Value-Added Producer Grants Request: No Funding Limitation
The Conservation Security Program (authorized by Section 2001 of
the 2002 farm bill) and the Value-Added Producer Grant (authorized by
Section 6401 of the 2002 farm bill) have great potential to benefit
organic producers in their efforts to conserve natural resources and to
explore new, value-added enterprises as part of their operations.
Unfortunately, while these programs were authorized to operate with
mandatory funding, their usefulness has been limited by funding
restrictions imposed through the annual appropriations process. We are
urging that the Conservation Security Program and the Value-Added
Producer Grant Program be permitted to operate with unrestricted
mandatory funding, as authorized.
Thank you for this opportunity to testify and for your
consideration on these critical funding requests.
______
Prepared Statement of National Potato Council
My name is Ed Schneider. I am a potato farmer from Pasco,
Washington and current Vice President, Legislative/Government Affairs
for the National Potato Council (NPC). On behalf of the NPC, we thank
you for your attention to the needs of our potato growers.
The NPC is the only trade association representing commercial
growers in 50 States. Our growers produce both seed potatoes and
potatoes for consumption in a variety of forms. Annual production is
estimated at 437,888,000 cwt. with a farm value of $3.2 billion. Total
value is substantially increased through processing. The potato crop
clearly has a positive impact on the U.S. economy.
The potato is the most popular of all vegetables grown and consumed
in the United States and one of the most popular in the world. Annual
per capita consumption was 136.5 pounds in 2003, up from 104 pounds in
1962 and is increasing due to the advent of new products and heightened
public awareness of the potato's excellent nutritional value. Potatoes
are considered a nutritious consumer commodity and an integral,
delicious component of the American diet.
The NPC's fiscal year 2007 appropriations priorities are as
follows:
Potato Research
Cooperative State Research Education and Extension Service
(CSREES)
The NPC urges the Congress not to support the President's fiscal
year 2007 budget request to eliminate the CSREES Special Grant Programs
and the formula funds under the Hatch Act. Both of these programs
support important university research work that helps our growers
remain competitive in today's domestic and world marketplace.
The NPC supports an appropriation of $1.8 million for the Special
Potato Grant program for fiscal year 2007. The Congress appropriated
$1.417 million in fiscal year 2004, a decrease from the fiscal year
2003 level of $1.584 million and $1.509 million in fiscal year 2005.
This has been a highly successful program and the number of funding
requests from various potato-producing regions is increasing.
The NPC also urges that the Congress include Committee report
language as follows:
``Potato research.--The Committee expects the Department to ensure
that funds provided to CSREES for potato research are utilized for
varietal development testing. Further, these funds are to be awarded
after review by the Potato Industry Working Group.''
Agricultural Research Service (ARS)
The NPC urges that the Congress not support the Administration's
fiscal year 2007 budget request to rescind all fiscal year 2005
Congressional increases for research projects.
The Congress provided funds for a number of important ARS projects
and, due to previous direction by the Congress, the ARS continues to
work with the NPC on how overall research funds can best be utilized
for grower priorities.
Foreign Market Development: Market Access Program (MAP)
The NPC also urges that the Congress maintain the spending level
for the Market Access Program (MAP) at its authorized level of $200
million for fiscal year 2007 and not support the Administration's
budget request to cap this valuable export program at the $125 million
level.
Foreign Agriculture Service (FAS)
The NPC supports the President's fiscal year 2007 budget request of
$152.4 million for the USDA Foreign Agriculture Service (FAS). This
level is the minimum necessary for the agency given the multitude of
trade negotiations and discussions currently underway.
Food Aid Programs
Mcgovern-Dole
The NPC supports the Administration's fiscal year 2007 budget
request of $100 million for the McGovern-Dole International Food Aid
Program. PVO's have been including potato products in their
applications for this program.
Public Law 480
The President's fiscal year 2007 budget requests $1.2 billion for
USAID programs, including $964 million for USAID Public Law 480 Title
II programs. The President's budget also transfers $300 million from
USAID Title II activities funded under the Agriculture Budget to the
Foreign Operations Budget. The NPC urges that the $300 million be
reinstated in the regular USAID Public Law 480 Title II budget to avoid
a significant loss of applications for dehydrated potatoes in Title II
programs and procurement of U.S. food commodities for food aid.
Pest and Disease Management
Animal and Plant Health Inspection Service (APHIS)
Golden Nematode Quarantine.--The NPC supports an appropriation of
$1,266,000 for this quarantine which is what is believed to be
necessary for USDA and the State of New York to assure official control
of this pest. Failure to do so could adversely impact potato exports.
Given the transfer of Agriculture Quarantine Inspection (AQI)
personnel at U.S. ports to the Department of Homeland Security, it is
important that certain USDAAPHIS programs be adequately funded to
ensure progress on export petitions and protection of the U.S. potato
growers from invasive and harmful pests and diseases.
Pest Detection.--The NPC supports $45 million in fiscal year 2007,
which is the Administration's budget request. Now that the Agriculture
Quarantine Inspection (AQI) program is within the new Homeland Security
Agency, this increase is essential for the Plant Protection and
Quarantine Service's (PPQ) efforts against potato pests and diseases
such as Ralstonia.
Emerging Plant Pests.--$101 million was appropriated in fiscal year
2005. The President requests $127 million in fiscal year 2007 which the
NPC supports.
The NPC supports having the Congress once again include language to
prohibit the issuance of a final rule that shifts the costs of pest and
disease eradication and control to the States and cooperators.
Trade Issues Resolution Management.--$12,578,000 was appropriated
in fiscal year 2005 and the President requests $18 million in fiscal
year 2007. The NPC supports this increase only if it is specifically
earmarked for plant protection and quarantine activities. These
activities are of increased importance yet none of these funds are used
directly for plant protection activities. As new trade agreements are
negotiated, the agency must have the necessary staff and technology to
work on plant related import/export issues. The NPC also relies heavily
on APHIS-PPQ resources to resolve phytosanitary trade barriers in a
timely manner.
Agricultural Statistics
National Agricultural Statistics Service (NASS)
The NPC supports sufficient funds and guiding language to assure
that the potato objective yield and grade and size surveys are
continued.
Rural Development Grants
Since potato growers do not receive direct payments, the 2002 Farm
Bill provided for, among other things, grants to allow our growers to
expand their business opportunities. One program that has been used by
our growers is the value-added grant program. The NPC would urge that
the Farm Bill funding level for this program be maintained. In
addition, maintaining adequate farm labor is also important to our
growers. The NPC urges that farm labor housing grants be maintained and
not reduced as proposed by the Administration's budget request.
______
Prepared Statement of the National Rural Telecom Association
Project Involved.--Telecommunications lending programs administered
by the Rural Utilities Service of the U.S. Department of Agriculture
Actions Proposed.--Supporting loan levels for fiscal year 2007 in
the amounts requested in the President's budget for 5 percent direct
($144 million) and cost of-money ($247 million) and the associated
subsidy, as required, to fund those programs at the requested levels.
--Supporting Sec. 306 guaranteed loans in the amount ($299 million)
requested in the budget.
--Opposing the budget request that would cut direct loans for
broadband facilities and internet service access by almost 30
percent from the fiscal year 2006 enacted level of $500 million
to $356 million. Supporting the request to fund the program
through discretionary funding and the budget proposal to
provide $30 million of the authorized level in broadband loans
at an interest rate of 4 percent.
--Supporting the completion of the dissolution of the Rural Telephone
Bank in fiscal year 2006 in accordance with the
administration's budget assumption.
--Supporting continued funding, as requested in the President's
budget, in the amount of $25 million in grant authority
designated for distance learning and medical link purposes.
Mr. Chairman, Members of the Committee: My name is John F. O'Neal.
I am General Counsel of the National Rural Telecom Association. NRTA is
comprised of commercial telephone companies that borrow their capital
needs from the Rural Utilities Service of the U.S. Department of
Agriculture (RUS) to furnish and improve telephone service in rural
areas. Approximately 1000, or 71 percent of the Nation's local
telephone systems borrow from RUS. About three-fourths of these are
commercial telephone companies. RUS borrowers serve almost 6 million
subscribers in 46 states and employ over 22,000 people. In accepting
loan funds, borrowers assume an obligation under the act to serve the
widest practical number of rural users within their service area.
Program Background
Rural telephone systems have an ongoing need for long-term, fixed
rate capital at affordable interest rates. Since 1949, that capital has
been provided through telecommunications lending programs administered
by the Rural Utilities Service and its predecessor, the Rural
Electrification Agency (REA).
RUS loans are made exclusively for capital improvements and loan
funds are segregated from borrower operating revenues. Loans are not
made to fund operating revenues or profits of the borrower system.
There is a proscription in the Act against loans duplicating existing
facilities that provide adequate service and state authority to
regulate telephone service is expressly preserved under the Rural
Electrification Act.
Rural telephone systems operate at a severe geographical handicap
when compared with other telephone companies. While almost 6 million
rural telephone subscribers receive telephone service from RUS borrower
systems, they account for only 4 percent of total U.S. subscribers. On
the other hand, borrower service territories total 37 percent of the
land area--nearly 12 million squares miles. RUS borrowers average about
six subscribers per mile of telephone line and have an average of more
than 1,000 route miles of lines in their systems.
Because of low-density and the inherent high cost of serving these
areas, Congress made long-term, fixed rate loans available at
reasonable rates of interest to assure that rural telephone
subscribers, the ultimate beneficiaries of these programs, have
comparable telephone service with their urban counterparts at
affordable subscriber rates. This principle is especially valid today
as this administration endeavors to deploy broadband technology and as
customers and regulators constantly demand improved and enhanced
services. At the same time, the underlying statutory authority
governing the current program has undergone significant change. In
1993, telecommunications lending was refocused toward facilities
modernization. Much of the subsidy cost has been eliminated from the
program. In fact, most telecommunications lending programs now generate
revenue for the government. The subsidy that remains has been targeted
to the highest cost, lowest density systems in accordance with this
administration's stated objectives.
We are proud to state once again for the record that there has
never been a loan default by a rural telephone system! All of their
loans have been repaid in accordance with their terms: $13 billion in
principal and interest at the end of the last fiscal year.
Need for RUS Telecommunications Lending Continues
The need for rural telecommunications lending is great today,
possibly even greater than in the past. Technological advances make it
imperative that rural telephone companies upgrade their systems to keep
pace with improvements and provide the latest available technology to
their subscribers. And 5 years ago, Congress established a national
policy initiative mandating access to broadband for rural areas. But
rapid technological changes and the inherently higher costs to serve
rural areas have not abated, and targeted support remains essential.
Competition among telephone systems and other technological
platforms have increased pressures to shift more costs onto rural
ratepayers. These led to increases in both interstate subscriber line
charges and universal service surcharges on end users to recover the
costs of interstate providers' assessments to fund the Federal
mechanisms. Pressures to recover more of the higher costs of rural
service from rural customers to compete in urban markets continue to
burden rural consumers. There is a growing funding crisis for the
statutory safeguards adopted in 1996 to ensure that rates, services and
network development in rural America will be reasonably comparable to
urban telecommunications opportunities.
Ongoing Congressional Mandates for Rural Telecommunications
Considerable loan demand is being generated because of the mandates
for enhanced rural telecommunications standards contained in the
authorizing legislation. We are, therefore, recommending the following
loan levels for fiscal year 2007 and the appropriation of the
associated subsidy costs, as required, to support these levels:
------------------------------------------------------------------------
------------------------------------------------------------------------
5 percent Direct Loans.................................. $144,000,000
Cost-of-Money Loans..................................... 247,000,000
Guaranteed Loans........................................ 299,000,000
Broadband Loans......................................... 500,000,000
---------------
Total............................................. 1,190,000,000
------------------------------------------------------------------------
These are the same levels for 5 percent direct, cost-of-money loans
and guaranteed loans, as requested in the President's budget for fiscal
year 2007 and the enacted amount for broadband loans in the fiscal year
2006 appropriations act. The authorized levels of loans in each of
these programs were substantially obligated in fiscal year 2005 and
current estimates are that authorized program levels will be met in
fiscal year 2006. We believe that the needs of this program balanced
with the minimal cost to the taxpayer make the case for its
continuation at the stated levels.
Rural Telephone Bank Dissolution Initiative
Congress established the Rural Telephone Bank in 1971 to provide
supplemental financing for rural telephone systems with the objective
that the bank ultimately would be owned and operated by its private
shareholders. However, changed circumstances in the rural telephone
industry and difficulties associated with accelerating privatization of
the Rural Telephone Bank have made this transition to private ownership
and control problematic raising difficult questions about the viability
of a privatized bank and its future support among rural telephone
systems.
In recognition of these factors, the administration, subject to
congressional approval, determined to dissolve the bank in fiscal year
2006 pursuant to Sec. 411 of the RTB enabling act. We continue to
support this action as well as the budget recommendation to transfer
the historic lending authority of the RTB ($175 million) to the
guaranteed loan program so that rural telephone systems will continue
to have adequate loan resources available for rural telecommunications
infrastructure development at the levels intended by the Congress. We
share the assumption in the fiscal year 2007 budget that the bank's
dissolution will be completed during the current fiscal year.
The Broadband Loan Program
The broadband loan program was funded last year for the current
fiscal year at $500 million. Very little subsidy cost is associated
with this program since most of the loans are made at the government's
cost-of-money. Despite that, the President's budget recommends reducing
the loan levels for fiscal year 2007 by almost 30 percent to $356
million. We are opposed to that and recommend to the committee that the
fiscal year 2007 appropriations bill continue to fund the program at
enacted levels. The demand for this program is still quite strong and
if the President's stated objective of deploying this technology to all
rural areas of this country is to be met, the $500 million funding
level must be maintained.
At the same time, this year's budget recognizes that given the high
costs involved in the more sparsely populated areas requires subsidy
assistance and recommends that $30 million of the authorized level of
these loans be made at a 4 percent interest rate. We support that
initiative as well as the budget request to fund the program through
discretionary rather than mandatory funding.
Grants for Medical Link and Distance Learning Purposes
We support the continuation in fiscal year 2007 of the $25 million
in grant authority provided in the President's budget for medical link
and distance learning purposes and the decision to not request
additional loan funds for these programs. The purpose of these grants
is to accelerate deployment of medical link and distance learning
technologies in rural areas through the use of telecommunications,
computer networks, and related advanced technologies by students,
teachers, medical professionals, and rural residents. We agree with the
conclusion in the budget that these projects are more feasible when
provided through grants to eligible recipients rather than loans.
Conclusion
Thank you for the opportunity to present the association's views
concerning this vital program. The telecommunications lending programs
of RUS continue to work effectively and accomplish the objectives
established by Congress at a minimal cost to the taxpayer. They serve
to assure that America's rural inhabitants will never become second-
class citizens in this modern information age of telecommunications
technology.
______
Prepared Statement of the National WIC Association
Dear Chairman Bennett and Ranking Member Kohl: We write on behalf
of the National WIC Association, NWA, to present comments on the
President's proposal to fund the Special Supplemental Nutrition Program
for Women, Infants and Children, known as WIC, for the fiscal year
2007.
We write on behalf of the thousands of nationally recognized WIC
health professionals, nutritionists and dietitians who are committed to
addressing the nutrition and healthcare needs of WIC families. Our
members serve over 8.0 million low and moderate-income women and
children with, or at risk of developing, nutrition-related health
problems through 2,100 WIC agencies in 10,000 WIC clinics each month.
WIC serves almost one-half of all infants born in this country and
roughly 1 in 4 of all children between 1 and 5 years of age. Our
members are the front lines battling to improve the quality of life for
our most vulnerable populations.
At the outset, we would like to compliment both of you and members
of the Subcommittee for your long-term commitment to WIC. The future of
our Nation's low-income women, infants and children depend upon your
support. NWA is proud of the strong bi-partisan commitment WIC has
engendered since its inception.
As well, we compliment the President, Secretary Mike Johanns, Under
Secretary for Food, Nutrition, and Consumer Services Eric Bost and
their teams for their past support of WIC.
We applaud the President for proposing to provide $15 million for
breastfeeding initiatives, $14 million for infrastructure funds, $125
million to restore the contingency fund, and to maintain the moratorium
on new WIC-Only vendors.
In contrast to the President's budget proposal of $5.2 billion, NWA
strongly recommends that WIC be funded at $5.388 billion. NWA's
recommended funding level is $188 million above the President's request
and redresses the damages from the proposed cap on NSA funding ($152
million), the proposal to cap Medicaid adjunctive eligibility ($3
million), a failure to provide funding for essential MIS needs ($30
million) and important health outcomes research ($3 million).
We are dismayed that the President has again offered his proposal
to cap nutrition services funding (NSA) at 25 percent of the total
amount provided--that Congress wisely defeated in the 1st Session of
the 109th Congress. This proposal will reduce services for all mothers
and children and because States are highly unlikely to be able to
further reduce per participant costs, 850,000 mothers and children
could potentially lose essential nutrition services benefits.
Nutrition services include nutrition assessment, counseling and
education, obesity prevention efforts, breastfeeding support and
promotion efforts, on-going interventions of nutrition related
complications of pregnancy, complex feeding and growth issues of
infants and children, follow-up of special metabolic formulas, pre-
natal and pediatric healthcare referrals and follow-up, spousal and
child abuse referral, drug and alcohol counseling referral,
immunization screening assessment and referral and a host of other
client benefits. Simply put, the President's proposal to cap nutrition
services funding, NSA, represents a significant benefit cut to WIC
mothers and children.
The Government Accountability Office, GAO, in its mandated report
to Congress entitled ``Food Assistance: WIC Faces Challenges in
Providing Nutrition Services,'' published in December 2001, writes
that: ``WIC has been faced with the challenge of meeting additional
program requirements with available resources. Since the late 1980's, a
number of requirements have been placed on the program aimed at, among
other things, containing the cost of food benefits, promoting
breastfeeding, encouraging immunizations, and controlling program
abuse. While these requirements have placed additional service delivery
and administrative demands on WIC staff, they have not been accompanied
by more funding per participant; the NSA grant per participant was
established in 1989 and since then has only been adjusted for
inflation. There is also evidence that nonfederal support for NSA may
have decreased since fiscal year 1992. Nor have the additional demands
been offset by reductions in other responsibilities. As a result, WIC
agencies have had to cut costs and make changes in service delivery
that potentially will have a negative impact on the quality of WIC
services (GAO-02-142, p. 31).''
Balancing increased program demands and available resources has
forced WIC Programs across the nation to cut costs despite increasing
needs.
Indeed, local agencies have been forced to consolidate or close
clinics and in some cases dramatically increase participant to staff
ratios to unacceptable levels of 1,000:1 or 1,200:1 from 300:1. The GAO
quotes 1998 and 2001 USDA studies that found that ``22 percent of local
agencies serving almost 25 percent of all WIC participants reported
having inadequate office space. Additionally, 30 percent of local
agencies serving about 41 percent of all WIC participants reported
having insufficient numbers of professional staff. Finally, 56 percent
of State WIC agency automated management information systems were not
capable of performing, or efficiently performing, 1 or more of 19
essential program tasks (GAO-02-142, p. 37).'' Evidence suggests that
this situation has only gotten worse.
It is important to note that State cost containment efforts have
significantly contributed to reducing WIC food package costs. Indeed,
savings from infant formula cost containment efforts allow WIC to cover
the food benefits provided to roughly 20 percent of WIC mothers and
children and saved the Subcommittee and Federal tax payers over $23
billion since 1989. ``If rebate savings are considered, NSA has
remained roughly 20 percent of total program costs from 1988 through
1999 (GAO-02-142, p. 34).'' In essence, cost containment has
effectively capped NSA at unreasonably low levels. A legislated cap has
the potential to further diminish the success and savings the Program
has achieved.
It takes NSA resources to prescribe and distribute WIC food
packages and maintain program integrity. The President's proposed cap
on WIC NSA funding will result in unspent WIC food resources and unmet
participant needs, increasing the vulnerability of all ready food
insecure mothers and children. We cannot imagine that the President
intends this result when in previous years he was so committed to
ensuring that WIC received additional overall Program funding.
WIC's population, like the general population, has experienced
dramatic increases in the prevalence of overweight and obesity and
related health issues. A study released by the Department of Health and
Human Services' Centers for Disease Control and Prevention shows that
deaths due to poor diet and physical inactivity rose by 33 percent over
the past decade and may soon overtake tobacco use as the leading
preventable cause of death. WIC Programs across the Nation have been
actively engaged in obesity prevention efforts since the turn of the
millennium and WIC is recognized for its role in addressing the
Nation's obesity health crisis.
WIC uses multiple key nutrition services strategies in the
Program's nearly 10,000 clinics to combat the growing national obesity
epidemic. These include:
--Individualized nutrition assessments provided to mothers and
children to identify overweight or obesity among other
nutrition risks;
--Individualized nutrition counseling provided for at-risk mothers
and children;
--Prescribed, tailored, reduced fat and low-sugar WIC food packages
provided to all WIC mothers and children that include reduced
or non-fat milk, reduced-fat cheese, and cereals with 6 grams
of sugar or less;
--Counseling to promote increased physical activity;
--Counseling for eating and life-style behaviors that may contribute
to overweight and obesity;
--Instruction on how to select and prepare healthy foods;
--Active promotion and support of breastfeeding as the best form of
infant feeding--acknowledged to aid in preventing childhood
overweight and obesity.
Inadequate nutrition services and administration funding will
stifle WIC's efforts to achieve positive nutrition outcomes.
The net result of the President's proposal to cap nutrition
services funding, NSA, would be to harm the Program and to erode
benefits and services for mothers and children.
We urge the Subcommittee to once again exempt WIC from the proposed
cap on Nutrition Services funding to protect critical WIC participant
benefits.
NWA urges the Subcommittee not to override WIC's authorizing
statute and to provide $30 million annually outside of the regular NSA
grant to implement MIS core functions, upgrade and maintain WIC
technology systems, achieve program efficiencies and economies, and
render systems EBT ready. This will fulfill the President's own WIC
technology initiative, embodied in the Child Nutrition and WIC
Reauthorization Act of 2004.
The President, in his WIC reauthorization agenda, recognized that
technology provides a critical foundation for quality WIC services and
Program Integrity. He recognized that funding WIC technology from
existing resources compromises WIC's ability to deliver services and
develop responsive MIS systems. Current limits on funding prevent more
than half--56 percent--of WIC State agencies from meeting USDA core
functions. Among these core functions are those that are critical for
States to effectively manage grant funds and food cost containment
efforts.
To develop and maintain MIS and electronic service delivery
systems, and to link with other health data systems the President urged
Congress during reauthorization to earmark and provide a funding level
of $30 million annually outside the regular NSA grant to implement MIS
core functions, upgrade WIC technology systems, maintain MIS and
electronic services and expedite the joint NWA/USDA 5 year plan for
State MIS systems. This funding level is a mere down payment for the
actual costs of improving outdated and outmoded MIS systems--USDA
reported in 2001 that ``the cost of bringing WIC's essential program
tasks up to standard in all States over the next 6 years is between
$147 million and $267 million (GAO-02-142, p. 22).''
The President's fiscal year 2007 proposal provides no monies for
MIS, seriously jeopardizing mandated vendor cost containment
requirements and impending changes to the WIC food packages essential
to combating obesity. We urge the Subcommittee to act to fund MIS and
electronic service delivery systems at $30 million in its
appropriations bill.
NWA urges that Congress continue to save Medicaid funds by ensuring
that all Medicaid recipients remain automatically income eligible for
WIC. The President has again proposed a cap on Medicaid adjunctive
eligibility, freezing that eligibility level at 250 percent. This
proposal, wisely rejected by Congress last year, most directly affects
MD, MO, MN, NH, RI and VT.
This proposal flies in the face of the Administration's purported
efforts to reduce NSA costs by driving up the expense of doing WIC
business for the six States directly affected. Though it eliminates
eligibility for only a small number of individuals, it would require
the affected States to accomplish duplicative income documentation for
all Medicaid recipients applying for WIC. It would have the unintended
consequence of potentially discouraging otherwise WIC eligible mothers
and children from applying if they feel that they may not be eligible,
undermining the preventative impact of WIC and adding unnecessary
administrative burden.
Although this proposal is not included in the fiscal year 2007
budget request for WIC, the President has signaled his intention in the
Administration's fiscal year 2007 budget request to recommend in fiscal
year 2008 a required State match of 20 percent for nutrition services
(NSA) funds. NWA urges Subcommittee members to oppose this
recommendation. Based on USDA data, adjusted for inflation, in fiscal
year 2008, should States fail to provide a match, more than 1.5 million
mothers and children would be at risk of losing critical nutrition
services benefits!
It is inconceivable that State legislatures and governors would be
willing to provide matching funds. This proposal would be disastrous
for the future of WIC, leading to a significant deterioration in
services and State and local agencies closing down clinics, even entire
programs. WIC food benefits cannot be prescribed or provided, nor can
program integrity be maintained without adequate NSA resources.
A matching grant would undermine or even eliminate current
effective collaborative relationships due to reduced resources.
Collaboration is already jeopardized with some programs that have
limited resources as a result of Federal and State funding cuts.
A national priority for 32 years, WIC ensures healthy pregnancies,
babies and children. To make WIC anything less than a national priority
runs the risk of increased infant mortality and increased numbers of
low birth weight infants. WIC must remain a national priority.
Finally, NWA has sought changes in the WIC Food Packages since
2000, attempting to bring them in line with current dietary science.
The Association has encouraged USDA/FNS to publish a proposed rule
transforming the WIC food packages by adding fresh, frozen and canned
fruits and vegetables, among other changes proposed by the National
Academy of Sciences Institutes of Medicine. NWA urges the Subcommittee
to continue to press USDA/FNS for immediate publication of a proposed
rule, reflecting the IOM's recommendations, with a minimum 90-day
public comment period. The time for change in the WIC food packages is
now if we are to continue to meet the challenges of ensuring healthy
children and preventing obesity in low-income populations.
NWA urges the Subcommittee to fully fund WIC for the fiscal year
2007 at $5.388 billion, oppose the NSA and Medicaid caps, fund MIS at
$30 million, fund breastfeeding initiatives at $15 million, fund
infrastructure needs at $14 million, fully restore the WIC contingency
fund to $125 million, continue the moratorium on new WIC-Only stores
until State agencies are in full compliance with the Interim Final Rule
on Vendor Cost Containment, and fund WIC health outcomes research at $3
million.
WIC is a short-term intervention program designed to influence
lifetime nutrition behaviors and lifelong health outcomes in a
targeted, high-risk population. It has an extraordinary, nearly 31-year
record of preventing children's health problems and improving their
health, growth and development. WIC children enter school ready to
learn. They show better cognitive performance. It would be tragic to
undo 32 years of success and reverse the President's own multi-year
commitment to the families WIC serves.
______
Prepared Statement of The Nature Conservancy
Mr. Chairman and members of the Subcommittee, I appreciate this
opportunity to present The Nature Conservancy's recommendations for
fiscal year 2007 appropriations for Agriculture, Rural Development,
Food and Drug Administration and Related Agencies. My name is Jimmie
Powell and I am the Director of Government Relations at the
Conservancy.
The Nature Conservancy is an international, nonprofit organization
dedicated to the conservation of biological diversity. Our mission is
to preserve the plants, animals and natural communities that represent
the diversity of life on Earth by protecting the lands and waters they
need to survive. Our on-the-ground conservation work is carried out in
all 50 states and in 27 foreign countries and is supported by
approximately one million individual members. We have helped conserve
nearly 15 million acres of land in the United States and Canada and
more than 102 million acres with local partner organizations globally.
Much of my testimony today will concern the pests, pathogens and
other invasive species that threaten natural landscapes and working
lands all across our Nation. These threats are urgent and it is most
important that the federal government provide leadership now in
addressing this growing threat to our economy and to the wildlife and
plants of our continent.
Asian Longhorned Beetle.--The Asian Longhorned Beetle kills a wide
variety of hardwood trees, particularly sugar maple. ALB threatens to
devastate forests reaching from New England to the Great Lakes.
Currently the beetle is found primarily in New York City and New
Jersey. APHIS, working with state, and local officials, is succeeding
in a 10-year program to eradicate ALB. The President has proposed
funding of $19.927 million in fiscal year 2007 as compared to the
$19.859 million appropriated (after recision) in fiscal year 2006. We
urge the Subcommittee to fund ALB at $30 million in fiscal year 2007,
so that the ongoing efforts to eradicate this pest will succeed.
Failure to eradicate the ALB exposes both urban and rural areas of
northern states to substantial risk. If not stopped, ALB could kill 30
percent of the Nation's urban trees at a compensatory value of $669
billion. If it is unchecked, the New England maple syrup industry is
threatened as well as autumn foliage tourism which generates $1 billion
in revenue in New England every year.
Cactus Moth.--The cactus moth kills prickly pear cacti. First found
in Florida, the moth is rapidly moving along the Gulf Coast (currently
it has traveled as far as Alabama). APHIS has bred a sterile cactus
moth that may help control the spread of this pest. Control of the
cactus moth before it disperses around the Gulf Coast would protect the
vast diversity of prickly pear cacti in the southwestern United States
and Mexico. There are 31 likely host prickly pear species (opuntia) for
the moth across the United States (9 found nowhere else in the world),
including the federally endangered Opuntia treleasei, and 56 in Mexico
(38 found nowhere else in the world). Control would also protect
agricultural interests. Horticultural production of prickly pears
occurs in Arizona, California, Nevada, New Mexico, and Texas. Annual
revenues for Arizona alone are estimated at $14 million. In drought
years, ranchers in Texas have burned the spines off opuntias and fed
them to cattle. Thus, the cactus moth presents both a critical
ecological and agricultural threat. We urge you to fund eradication
efforts at $1.5 million in fiscal year 2007 for a full sterile release
program.
Emerald Ash Borer.--The Emerald Ash Borer (EAB), an Asian native,
was detected in 2002. Control programs began in 2003. The quarantine
area now covers nearly 20,000 square miles in Michigan's Lower
Peninsula and nearby areas in Indiana, Ohio, with additional areas in
Ontario. At present, spread of the emerald ash borer to the Upper
Peninsula, Illinois, and Wisconsin is partially prevented by the Great
Lakes. However, if eradication efforts are not sufficiently aggressive,
EAB will spread further south into Ohio and Indiana, and be carried to
other vulnerable areas in the East and Midwest. Seven billion ash trees
are at risk across the Nation, at an estimated cost of $282 billion. We
urge the Subcommittee to provide APHIS with $55 million to contain the
Emerald Ash Borer in fiscal year 2007. In fiscal year 2006, APHIS is
spending only $9.93 million in appropriated funds. We support the
efforts of Governors and other partners to obtain urgently needed
emergency funds drawn from the Commodity Credit Corporation (CCC) to
contain this beetle. Since funding must continue at this higher level
for the program to succeed, it is important that the Congress
appropriate $55 million in fiscal year 2007 and beyond.
Sudden Oak Death.--Since 2000, APHIS has worked with California,
Oregon, and other states to prevent the spread of Sudden Oak Death
(SOD). This disease infects at least 40 native tree, shrub and herb
species. The disease kills a variety of western and eastern oak trees.
SOD has already killed one hundred thousand tanoaks, live oaks and
black oaks in California. If SOD spreads into Oregon and Washington, it
could severely disrupt production and movement of Douglas-fir seedlings
used in replanting. If SOD spreads to the East, it is likely to kill
large numbers of red oaks. Collectively the red and white oaks comprise
38 percent of the Nation's total hardwood saw-timber volume.
Containing Sudden Oak Death has become more challenging as the
number of host plants has grown. The situation became a crisis in 2004
when officials discovered that infected nursery plants had been shipped
to more than 200 nurseries across the country. APHIS adopted highly
restrictive regulations to prevent a recurrence of the 2004 crisis that
are proving effective: in 2005, inspectors detected infected plants in
56 nurseries, only 8 of which were not on the West Coast. In fiscal
year 2007, at least $9 million is needed to ensure the continued
efficacy of these regulations and curb the spread of this disease.
Sirex Woodwasp.--This wood-boring insect native to Europe, Asia,
and North Africa has been introduced into pine plantations in several
countries in the Southern Hemisphere where it caused serious damage
before the release of a biological control agent reduced the problem.
The wasp has now become established in New York and Ontario. According
to the USDA Forest Service, if the Sirex woodwasp is allowed to spread,
within 55 years it could cause damage ranging from $3 billion to $17
billion to U.S. pine timber and pulp production, primarily in the
South. To forestall these damages, APHIS must implement regulations to
prevent movement of infested material while expediting the safety
review required before any release in North America of the biological
control agent. We anticipate that APHIS will need several million
dollars for this new activity.
USDA Agriculture Research Service.--The Conservancy urges the
Subcommittee to provide funding for the Agricultural Research Service
(ARS) to study possible biological control agents targeting two insects
that threaten the unique cycad forests of Guam. The Asian cycad scale
and cycad blue butterfly--both individually and together--are on track
to destroy these forests. ARS staff at the Ft. Pierce, Florida
laboratory should receive funds to identify and test possible
biological control agents targeting these two harmful insects.
Additional funds are needed for staff on Guam.
Noxious Weed Control and Eradication Act.--We respectfully request
$15 million to fully implement the Noxious Weed Control and Eradication
Act of 2004, enacted by the 108th Congress. As control and management
of invasive species are important for agriculture, natural areas,
forestry, and rangeland, this effort has strong bipartisan support.
This issue is vital to the health of the Nation's economy and
ecosystems. Funding for this program now will save money in the long-
term.
Pest and Disease Management Programs.--APHIS provides technical and
financial support to help control or eradicate a variety of threats to
our agricultural and natural systems. In an attempt to further combat
pest and disease outbreaks and problems the Administration has proposed
a $10 million pilot competitive-bid program to award grants to private
groups who can respond to invasive species with innovative
methodologies. It has been noted that a major obstacle to APHIS'
ability to rapidly respond to infestations is that there is no national
system that addresses all types of invasive species infestations--those
affecting aquatic areas, rangelands, and forests as well as crops and
livestock. With this pilot program the agency may be able to increase
its effectiveness with invasive species by including the early
involvement of on the ground groups who recognize the urgent need for
rapid response, active involvement, and can bring with them pioneering
and resourceful tactics.
Wetlands Reserve Program.--America's wetlands are the habitat for
thousands of species of wildlife, and up to half of all North American
bird species nest or feed in wetlands and about half of all threatened
and endangered species use wetlands. In addition, our wetlands help to
trap pollution, reduce the impact of floods, stabilize shore areas, and
provide recreational opportunities. President Bush has committed to
increasing the number of wetland acres in the United States and has
requested full funding for the Wetlands Reserve Program (WRP) in his
fiscal year 2007 budget request. Full funding of WRP would allow for
enrollment of 250,000 acres in 2007, the full yearly authorized amount
in the 2002 Farm Bill. WRP is the key component in meeting the
president's promise to create, improve and protect at least 3 million
wetland acres over a 5-year period that ends in 2009.
Another very effective program administered under WRP, is the
Wetlands Reserve Enhancement Program (WREP), which uses existing
authority to enhance the delivery of WRP. Specifically, WREP provides
an avenue for NRCS to form special partnerships with States, local
governments, and non-profit organizations to improve and expand the
delivery of WRP through easement acquisition and activities associated
with wetland restoration, creation, or enhancement. We are pleased to
see NRCS using this tool to direct funding to locally initiated and led
projects that achieve maximum environmental benefits while remaining
cost-effective and leveraging non-Federal funds. We fully support the
expanded use of this program and propose that with an increased funding
level for WRP, NRCS be encouraged to expand its financial assistance
available for WREP.
Wildlife Habitat Incentive Program.--The Wildlife Habitat Incentive
Program (WHIP) is a highly-effective and widely-accepted program across
the country. WHIP is able to target wildlife habitat projects on all
lands and aquatic areas, and provides assistance to conservation-minded
landowners to develop and improve wildlife habitat on their lands. We
recommend that the committee support the President's program request
for an increase of $12 million over the 2006 level. The Conservancy
supports the NRCS proposal to target $10 million to improve migratory
fish habitats by removing obstructions from rivers, such as small
private dams and water diversions. This focus will help to create
incentives to protect streamside areas, repair instream habitat,
improve water flows and water quality, or initiate watershed management
and planning in areas where streams are in a degraded condition due to
past practices.
Conservation Reserve Program.--The Conservancy has been a strong
supporter of USDA's Conservation Reserve Program (CRP) and supports the
full authorized enrollment of 39 million acres. Roughly 35 million
acres across the country are under short term CRP rental agreements,
and beginning in 2007, contracts representing over 22 million acres
will expire, over 62 percent of those acres. USDA's Farm Service Agency
(FSA) is currently deciding how to handle this large number of expiring
contracts and additional acres, as well.
Few environmental programs have matched the scope and achievement
of CRP. Since its inception in 1986, the program has been responsible
for reducing soil erosion by nearly 40 percent and restoring the
grassland and wetland communities of the Great Plains. However, there
is still so much more that the program could accomplish. We urge the
committee to direct USDA to increase CRP's environmental benefits by:
(1) better targeting CRP enrollments; (2) enhancing the management of
CRP lands; and (3) assuring that inappropriate cover plantings are not
encouraged by the program. In order to achieve these higher
environmental benefits, FSA will need to update and improve the
Environmental Benefits Index (EBI). Proper management of CRP lands and
improved targeting of CRP contracts to attain the highest conservation
goals will require increased funding for the agency as it prepares for
huge reenrollment that it now faces.
______
Prepared Statement of the New Mexico Interstate Stream Commission
SUMMARY
This Statement is submitted in support of appropriations for the
U.S. Department of Agriculture's Environmental Quality Incentives
Program (EQIP) and the Colorado River Basin Salinity Control Program.
Prior to the enactment of the Farm Security and Rural Investment Act
(FSRIA) in 2002, the salinity control program had not been funded at
the level necessary to control salinity with respect to water quality
standards since the enactment of the Federal Agriculture Improvement
and Reform Act (FAIRA) of 1996. Inadequate funding of the salinity
control program also negatively impacts the quality of water delivered
to Mexico pursuant to Minute 242 of the International Boundary and
Water Commission. Adequate funding for EQIP, from which the U.S.
Department of Agriculture (USDA) funds the salinity program, is needed
to implement salinity control measures. The President's budget for
fiscal year 2007 requests an appropriation of $1 billion for EQIP. I
urge the Subcommittee to support an appropriation of at least $1
billion to be appropriated for EQIP. I request that the Subcommittee
designate 2.5 percent, but no less than $20 million, of the EQIP
appropriation for the Colorado River Basin salinity control program. I
request that adequate funds be appropriated for technical assistance
and education activities directed to salinity control program
participants.
STATEMENT
The seven Colorado River Basin States, in response to the salinity
issues addressed by Clean Water Act of 1972, formed the Colorado River
Basin Salinity Control Forum (Forum). Comprised of gubernatorial
appointees from the seven Basin States, the Forum was created to
provide for interstate cooperation in response to the Clean Water Act,
and to provide the States with information to comply with Sections
303(a) and (b) of the Act. The Forum has become the primary means for
the seven Basin States to coordinate with Federal agencies and Congress
to support the implementation of the Salinity control program.
Congress authorized the Colorado River Basin salinity control
program in the Colorado River Basin Salinity Control Act of 1974.
Congress amended the Act in 1984 to give new responsibilities to the
USDA. While retaining the Department of the Interior as the lead
coordinator for the salinity control program, the amended Act
recognized the importance of the USDA operating under its authorities
to meet the objectives of the salinity control program. Many of the
most cost-effective projects undertaken by the salinity control program
to date have occurred since implementation of the USDA's authorization
for the program.
Bureau of Reclamation studies show that damages from the Colorado
River to United States water users are about $330,000,000 per year.
Damages are estimated at $75,000,000 per year for every additional
increase of 30 milligrams per liter in salinity of the Colorado River.
It is essential to the cost-effectiveness of the salinity control
program that USDA salinity control projects be funded for timely
implementation to protect the quality of Colorado River Basin water
delivered to the Lower Basin States and Mexico.
Congress concluded, with the enactment FAIRA in 1996, that the
salinity control program could be most effectively implemented as a
component of EQIP. However, until 2004, the salinity control program
since the enactment of FAIRA was not funded at an adequate level to
protect the Basin State-adopted and Environmental Protection Agency
approved water quality standards for salinity in the Colorado River.
Appropriations for EQIP prior to 2004 were insufficient to adequately
control salinity impacts from water delivered to the downstream States,
and hampered the required quality of water delivered to Mexico pursuant
to Minute No. 242 of the International Boundary and Water Commission,
United States and Mexico.
EQIP subsumed the salinity control program without giving adequate
recognition to the responsibilities of the USDA to implement salinity
control measures per Section 202(c) of the Colorado River Basin
Salinity Control Act. The EQIP evaluation and project ranking criteria
target small watershed improvements which do not recognize that water
users hundreds of miles downstream are significant beneficiaries of the
salinity control program. Proposals for EQIP funding are ranked in the
States of Utah, Wyoming and Colorado under the direction of the
respective State Conservationists without consideration of those
downstream, particularly out-of-state, benefits.
Following recommendations of the Basin States to address the
funding problem, the USDA's Natural Resources Conservation Service
(NRCS) designated the Colorado River Basin an ``area of special
interest'' including earmarked funds for the salinity control program.
The NRCS concluded that the salinity control program is different from
the small watershed approach of EQIP. The watershed for the salinity
control program stretches almost 1,200 miles from the headwaters of the
river through the salt-laden soils of the Upper Basin to the river's
termination at the Gulf of California in Mexico. NRCS is to be
commended for its efforts to comply with the USDA's responsibilities
under the Colorado River Basin Salinity Control Act, as amended.
Irrigated agriculture in the Upper Basin realizes significant local
benefits of improved irrigation practices, and agricultural producers
have succeeded in submitting cost-effective proposals to NRCS.
Years of inadequate Federal funding for EQIP since the 1996
enactment of FAIRA and prior to 2004 resulted in the Forum finding that
the salinity control program needs acceleration to maintain the water
quality criteria of the Colorado River Water Quality Standards for
Salinity. Since the enactment of FSRIA in 2002, an opportunity to
adequately fund the salinity control program now exists. The
President's budget request of $1 billion accomplishes the needed
acceleration of the NRCS salinity control program if the USDA continues
its practice of designating 2.5 percent of the EQIP funds appropriated.
The requested funding of 2.5 percent, but no less than $20 million, of
the EQIP funding will continue to be needed each year for at least the
next few fiscal years.
State and local cost-sharing is triggered by and indexed to the
Federal appropriation. Federal funding for the NRCS salinity control
program of about $19.5 million for fiscal year 2006 has generated about
$15.8 million in cost-sharing from the Colorado River Basin States and
agricultural producers, or more than an 80 percent match of the Federal
funds appropriated for the fiscal year.
USDA salinity control projects have proven to be a most cost-
effective component of the salinity control program. USDA has indicated
that a more adequately funded EQIP program would result in more funds
being allocated to the salinity program. The Basin States have cost-
sharing dollars available to participate in on-farm salinity control
efforts. The agricultural producers in the Upper Basin are willing to
cost-share their portion and are awaiting funding for their
applications to be considered.
The Basin States expend 40 percent of the state funds allocated for
the program for essential NRCS technical assistance and education
activities. Previously, the Federal part of the salinity control
program funded through EQIP failed to adequately fund NRCS for these
activities, which has been shown to be a severe impediment to
accomplishing successful implementation of the salinity control
program. Recent acknowledgement by the Administration that technical
assistance and education activities must be better funded has
encouraged the Basin States and local producers that cost-share with
the EQIP funding for implementation of the essential salinity control
work. I request that adequate funds be appropriated to NRCS technical
assistance and education activities directed to the salinity control
program participants (producers).
I urge the Congress to appropriate at least $1 billion in fiscal
year 2007 for EQIP. Also, I request that Congress designate 2.5
percent, but no less than $20 million, of the EQIP appropriation for
the Colorado River Basin salinity control program.
______
Prepared Statement of the US Marine Shrimp Farming Consortium
Mr. Chairman, we greatly appreciate the opportunity to provide
testimony to you and the Subcommittee, to thank you for your past
support, and to discuss the achievements and opportunities of the US
Marine Shrimp Farming Consortium(USMSFC), funded under the Federal
initiative, Shrimp Aquaculture.
We bring to your attention the success of the US Marine Shrimp
Farming Consortium and its value to the Nation. The Consortium consists
of institutions from 7 States: the University of Southern Mississippi/
Gulf Coast Marine Laboratory, Mississippi; the Oceanic Institute,
Hawaii; Tufts University, Massachusetts; Texas Agricultural Experiment
Station, Texas A&M University, Texas; Waddell Mariculture Center, South
Carolina; the University of Arizona, Arizona; and Nicholls State
University, Louisiana. These institutions, which oversee the USMSFC,
have made major advances in technology development and services to
support the U.S. shrimp farming industry. The USDA in its 2004 program
review recognized the program's excellent scientific performance,
output, and multi-state collaborative efforts. The Consortium is at the
crossroads of contributing to major growth of the U.S. shrimp farming
industry, consolidating its competitive advantages, and satisfying
consumer's demands for safe and wholesome seafood products. Shrimp is
the number one consumed seafood product in the United States, yet
contributes to a $3.6 billion trade deficit, second only to the import
of oil for the deficit contributed by natural resource products.
Accomplishments
The Consortium, in cooperation with private industry, industry
associations, and government agencies has generated new technologies
for producing safe and premium quality marine shrimp at competitive
prices. To date, the program has: (1) established the world's first and
currently most advanced breeding and genetic selection program for
marine shrimp; (2) completed pioneering research and development of
advanced diagnostic tools for disease screening and control; (3)
described the etiology of shrimp diseases associated with viral
pathogens; (4) fostered shrimp production at near-shore, inland/rural
farm and even desert sites; (5) served a lead role in the Joint
Subcommittee on Aquaculture's efforts to assess the threat of globally
transported shrimp pathogens; (6) served on the Office of International
Epizootics, recommending country-of-origin labeling of imported shrimp
products to combat the spread of exotic disease pathogens, subsequently
adopted by the USDA in its 2002 Farm Bill; (7) supplied the United
States industry with selectively bred and disease-resistant shrimp
stocks; (8) developed advanced technology for biosecure shrimp
production systems to protect both cultured and native wild stocks from
disease; and (9) developed new feed formulations to minimize waste
generation and enhance the use of domestic grains and oilseed products.
These substantial accomplishments advance the continued growth of the
domestic industry place an important emphasis on environmental
sustainability, address concerns for the safety and quality of our
seafood supply, and increase market competitiveness.
Judging from the State of the industry today, USMSFC efforts
continue to have measurable positive effect. Coastal farming continues
to lead in the production of cultured shrimp in the United States,
inland farming has added new dimensions and growth to the industry, and
super-intensive production approaches are gaining momentum.
Improvements in farm management practices coupled with the widespread
use of disease-resistant stocks have resulted in bumper crops for the
industry over the last several years.
With reliable production in place, we have also seen a commensurate
geographic expansion of the industry within the United States from
three to seven States in the last 10 years. A broader industry base,
while increasing production through the addition of new farms, also
provides additional protection to the industry by geographically
isolating different regional sectors in the event of disease outbreaks
or natural disaster. Significant amounts of shrimp are now being
produced in Texas, South Carolina, Florida, Hawaii, Arizona, Alabama,
and Arkansas. Several other States are now beginning to explore
production with the newer, super-intensive technologies being
developed.
In addition, the recent and growing worldwide switch to use of
specific pathogen free (SPF) L. vannamei has created tremendous
opportunity for U.S. shrimp broodstock suppliers. This switch has been
caused by diseases overseas which have affected wild broodstock
animals, lowering overall yield and profitability. The SPF concept for
shrimp, pioneered by the USMSFC, has now been accepted worldwide and
U.S. broodstock suppliers are being overwhelmed by orders for their
stocks. For instance, in 2004, the State of Hawaii gave its exporter of
the year award to a local company specializing in shrimp broodstock.
Estimates are the world market for SPF stocks can reach near $90
million yearly.
Industry Vulnerability
While exceptional progress has been made, this emerging industry is
continually confronted with new challenges. The industry depends on the
USMSFC for leadership and innovative technology development. As a
result of development of high-health and improved stocks, disease
diagnosis, new feeds, and new production technologies and farming
approaches, the domestic industry has maintained relative stability,
while other countries have had major losses in their production due to
diseases and environmental problems. Disease losses due to exotic
viruses in Asia and Latin America during the past 6 years have
approached $6 billion USD.
Diseases present in imported commodity shrimp products threaten not
only the emerging domestic shrimp farming industry, but also the
Nation's native shrimp stocks. During 2004, limited disease outbreaks
did occur in Texas and Hawaii that were caused by a breakdown in
biosecurity protocols against imported shrimp products. A quick
response of the USMSFP, working in concert with the USDA's Animal and
Plant Health Inspection Services and other agencies in the State of
Texas, helped identify and isolate these outbreaks, limit the spread,
and minimize the loss in production nationwide. There were no
reoccurrences or outbreaks of other disease in 2005.
While significant progress has been made in risk assessment and
risk management with visible success, the industry and the USMSFC must
remain constantly vigilant and proactive to further improve global
competitiveness. In addition to providing significant input on the
development of national and international regulatory standards for
shrimp farmers, important service work for governmental agencies and
NGOs keeps us continuously apprised of new developments pertaining to
emerging regulations so that USMSFC research plans can be kept
proactively responsive to dynamic shifts in industry needs.
The overwhelming threat facing the U.S. marine shrimp farming
industry today is the significant decline in market prices for domestic
shrimp due to a surge of foreign imports over the last 3 years. The
decline has also seriously threatened the domestic shrimp harvest
industry. Average U.S. farm gate prices have fallen 40 percent since
then, constraining profitability and plans for industry expansion.
Anti-dumping tariffs imposed in February 2005 have not nor are
forecasted to stem the tide of rising imports, or improve domestic
shrimp prices as intended. Affected buyers and distributors have
largely absorbed those costs or producers have switched to product
forms not covered by the tariffs. Moreover, other countries not named
on the order have filled any voids with increased imports into the
United States.
Concerns also have been heightened over food safety issues
associated with unregulated use of antibiotics and fecal-borne
contaminants due to questionable production practices in certain
countries. Further, due to disease outbreaks worldwide, several foreign
countries have switched production to the dominant species in the
United States, eroding a previous competitive advantage. While it is
important that a level playing field be created through reexamination
of trade and food safety issues, more technologically advanced and
innovative approaches are now critically needed to leverage U.S.
industry gains, create competitive advantage, and improve
profitability. Innovative ways need to be sought to offset low prices
and to distinguish and add value to the domestic product to provide a
competitive edge in the marketplace and to ensure the safety of the
domestic seafood supply.
Industry Independence
In fact, despite recent price and profitability trends, investor
confidence is rising as a result of the work of the Consortium. New
farms are emerging utilizing new and improved technologies, while
others are working in cooperation with the Consortium on more advanced
approaches that are nearing fruition. In addition to supporting today's
industry, our advanced, high-density biosecure shrimp production
systems are now developed to the point for further expansion of shrimp
farming into near-shore, inland/rural and desert sites away from the
environmentally sensitive coastal zone. We now have in place the
economic models that will appropriately direct research to ensure
economic viability, taking in consideration all associated biological,
regional, and economic risk factors. Importantly, these new production
technologies produce the highest quality and safest shrimp, utilize
U.S. grain and oilseed products for feed production, and do not pose
any threat to the environment. These important traits of an evolving
domestic industry can be exploited to gain competitive edge, offset
declining prices, and ensure the quality and safety of shrimp for the
consumer. Clearly, the U.S. shrimp farming industry has emerged solid
from near collapse in the early 1990s, and appears well poised for a
new phase of growth, provided the technologies and innovations are in
place to support a larger, more diverse, and more competitive domestic
industry for the new millennium.
To support existing efforts and technology transfer and plans for
new dimensions to the research to address recent profitability issues,
an increase in the current funding level from $4.158 million to $6
million is requested. The increase will be used to: strengthen the
Consortium's biotechnology and molecular capabilities and activities to
support rapid and more advanced disease monitoring and genetic
selection efforts; accelerate the development of new genetic lines for
market advantage; advance high-density production prototypes to
commercial-scale testing; determine the mechanisms of disease immunity
in shrimp for protection of both farmed and wild shrimp stocks; and
address niche market technologies for competitive advantage. In
addition to these needed technological innovations, increased funding
will support new efforts to promote institutional innovations that will
enable expansion and vertical integration of the domestic industry,
including examination of regulatory impediments to shrimp aquaculture;
the effect of farm insurance; development of cooperatives; and the
socioeconomics of existing and advanced, high-density production
systems.
Mr. Chairman, the U.S. shrimp farming industry and our Consortium
deeply appreciate the support of the Committee and respectfully ask for
a favorable consideration of this request.
______
Prepared Statement of the Organic Farming Research Foundation (OFRF)
The Organic Farming Research Foundation (OFRF) has received support
from the following federal grants and contracts during the period
October 1, 2002 to present.
environmental protection agency (epa) strategic agriculture initiative
(sai) grants under the food quality protection act (fqpa)
REGION 9
Grant Agreement: X-97901601-0
Project Title: Organic Farming Research for Alternative Weed and
Pest Management
Project Period: 10/01/2001--12/31/2003 amended to 6/30/2005
This assistance agreement provided full Environmental Protection
Agency (EPA) funding in the amount of $84,000. The project supported
limited research in EPA Regions 8, 9 and 10 that investigated pest and
weed management in organic farming systems to develop alternative
approaches for managing pests and weeds without relying on agricultural
chemicals.
Grant Agreement: X-97935601-0
Project Title: Pest and Weed Management
Project Period: 11/01/2001--12/31/2004
This assistance agreement provided full Environmental Protection
Agency (EPA) funding in the amount of $10,430. The project supported
investigation and development of pest and weed management methods in
organic farming systems for a variety of crops in EPA Region 9 to
develop alternatives to synthetic agricultural chemicals.
REGION 5
Grant Agreement: X8-96562001-0
Project Title: Organic Farming Research Foundation
Project Period: 10/01/2004--9/30/2006
Environmental Protection Agency (EPA) funds in the amount of
$30,000 would be distributed through a competitive grants program for
projects that investigate organic pest control alternatives to
chemicals being reviewed under the Food Quality Protection Act. The
Organic Farming Research Foundation proposed to use EPA funding to
support research on organic farming practices for weed and insect pest
management in IL, IN, MI, MN, OH, and WI and tribal Nations.
Grant Agreement: X8-96562001-1
Project Title: Organic Farming Research Foundation
Project Period: 10/01/2004--9/30/2006
Environmental Protection Agency (EPA) funds in the amount of
$30,000 would be distributed through a competitive grants program for
projects that investigate organic pest control alternatives to
chemicals being reviewed under the Food Quality Protection Act. The
Organic Farming Research Foundation proposed to use EPA funding to
support research on organic farming practices for weed and insect pest
management in IL, IN, MI, MN, OH, and WI and tribal Nations.
REGION 8
Grant Agreement: X8-97815401-0
Project Title: Surveys, Studies, Investigations
Project Period: 10/01/2004--9/30/2006
Environmental Protection Agency (EPA) funds in the amount of
$40,000 support research on organic farming practices for weed and
insect pest management in CO, MT, ND, SD, UT, WY, and 27 Tribal
Nations. Funds are channeled through OFRF's competitive grants program
for projects that investigate organic pest control alternatives to
chemicals being reviewed under the Food Quality Protection Act.
UNITED STATES DEPARTMENT OF AGRICULTURE (USDA)/INITIATIVE FOR FUTURE
AGRICULTURE AND FOOD SYSTEMS (IFAFS)
Subcontract RF740050 under the USDA/IFAFS Award Number: 00-52101-
9691
Project Title: Revitalizing Small and Mid-Sized Farms: Organic
Research, Education, and Extension
Project Period: 9/15/2000--9/30/2004 amended to 9/30/2005
USDA/IFAFS funding in the amount of $221,038 to establish a
consortium of universities, non-profit and grassroots farmers
organizations that will revitalize small and mid-sized family farms by
integrating multidisciplinary research, education, and extension of
organic agriculture. The goal is to catalyze new opportunities for
farmers including niche marketing of high-value horticultural and
agronomic crops by expanding existing organic agriculture programs at
three land grant institutions.
I, Brise Tencer, am submitting this testimony on behalf of the
Board of Directors of the Organic Farming Research Foundation (OFRF) to
detail our recommendations and requests for funding of several USDA
marketing, research, and conservation programs of importance to organic
agriculture.
The Organic Farming Research Foundation is a non-profit whose
mission is to sponsor research related to organic farming practices, to
disseminate research results to organic farmers and to growers
interested in adopting organic production systems, and to educate the
public and decision-makers about organic farming issues.
As you prepare your appropriations priorities for the fiscal year
2007 Agriculture, Rural Development and Related Agencies Appropriations
bill, we request your support for the following organic programs.
Development of organic production effectively serves USDA strategic
objectives for environmental quality, human health and nutrition, and
agricultural trade. Organic agriculture has experienced extraordinary
growth over the last decade; the International Trade Center (UNCTAD/
WTO) estimates that organic products represent 2-2.5 percent of total
U.S. retail food sales. Because organic production improves
profitability and market access, it is a desirable alternative for many
producers and represents an important opportunity for growth in U.S.
agriculture. The organic sector is extremely diverse in scale,
technology, and market chains. Both ends of the scale spectrum are
experiencing vibrant growth. The modest funding levels requested below
will help these trends continue while providing a cost effective way to
create positive returns for the environment and our economy.
USDA AGRICULTURAL RESEARCH SERVICE
$10 Million for Strategic Regional Programming for Organic Agricultural
Research
In 2005, USDA-ARS spent about $3.5 million on organic-specific
projects, or about .35 percent of $1 billion fiscal year 2005 ARS
expenditures. Under a 2 percent ``fair share'' framework, the ARS would
have generated about $20 million for organic research in its budget.
The 2004 and 2005 appropriations omnibus bills contained language
urging ARS to direct an increased amount of resources to organic. This
report language was not a mandate and no significant increases in
organic expenditures have been seen over the last several years.
For fiscal year 2007, OFRF recommends $10 million for Strategic
Regional Programming for Organic Agricultural Research. This funding
would be part of an overall package of $10 million total that would be
distributed among the 8 Regional Areas (and the National Agricultural
Library). Regional distribution of funds would provide flexibility to
address the needs and opportunities of the organic production and
processing sector. This approach would make progress towards the ``fair
share'' goal and provide a bridge to the evolution of a national
program for organic research. Funding will be allocated by the Area
Directors (with stakeholder input) to (1) Maintain and enhance existing
CRIS projects, scientists and technicians whose objectives are specific
to organic production and processing; and (2) Provide support to
integrate organic agriculture objectives into other projects and
partnerships, where such capacity exists and when the objectives meet
priority needs (e.g., as identified by the ARS National Organic
Workshop held January, 2005 in Austin, Texas). The attached addendum to
this request provides additional information about regional needs.
usda cooperative state research education and extension service
Organic Transitions Program: $5 million
Over the last few years the Organic Transition research program has
become one of the most competitive of the USDA CSREES integrated grant
programs. Because of the high level of interest in this program, only
about 10 percent of qualified applicants have been able to receive
funding (compared to 19-29 percent of qualified applicants that receive
funding in comparable grants programs at the USDA CSREES). We expect
interest in this program to continue to grow. Expansion of this program
should focus on a higher number of smaller grants. Also, it is
important that this program keeps its own identity and not be
incorporated into the National Research Initiative (NRI). We ask the
committee to increase funding for Organic Transition program to $5
million in 2007 and for it to remain as part of the Integrated Organic
Program, distinct from the National Research Initiative.
National Research Institute (NRI): 30 percent directed to goals of the
Initiative for Future Food and Agricultural Systems (IFAFS)
The IFAFS program has provided an important source of research
funds for projects relevant to organic growers. The appropriation bills
between fiscal year 2003 to fiscal year 2006 each prohibit USDA from
spending money for IFAFS, but directed the Department to spend a 20
percent subset of the National Research Initiative competitive grants
program ``under the same terms and conditions'' as IFAFS. For fiscal
year 2007 we support the President's request that 30 percent of NRI be
directed to IFAFS goals. Additionally, we request the Committee include
report language directing the USDA CSREES to direct a significant
portion of these funds to organic research (including trade and
economic policy topics) within the following program areas: Managed
Ecosystems and Small and Mid sized Farm Viability and Rural
Entrepreneurship through inclusion of language soliciting applications
on organic research topics in the NRI requests for applications.
Sustainable Agriculture Research and Education (SARE): Chapter 1: $15
million, Chapter 3: $5 million
SARE funds farmer-driven research and outreach on profitable,
environmentally sound farming practices, including organic production.
SARE's solid track record, regional structure, and close links between
research and outreach mean that farmers nationwide get reliable
information they need on how to stay in business while being
environmentally responsible. In 2005 the SARE program was funded at
Chap 1: $9.2 million, Chap 3: $3.8 million. For 2007 we seek $15
million, $5 million for Chapters 1 and 3, respectively.
USDA ECONOMIC RESEARCH SERVICE
Organic Production and Marketing Data Collection: $750,000
Because increased ability to conduct economic analysis for the
organic farming sector is greatly needed, we request $750,000 be
appropriated to the USDA Economic Research Service to implement the
``Organic Production and Market Data Initiative'' included in Section
7407 of the 2002 farm bill.
USDA NATIONAL AGRICULTURE STATISTICS SERVICE (NASS)
Census follow up--Organic Grower Survey: $1 million
Unlike other sectors of agriculture, the organic industry has
suffered from a lack of data collection and analysis, which has limited
producers' ability to respond to market trends. The USDA NASS is
currently in the process of developing the 2007 agricultural census.
Although they are making an effort to expand the quantity of organic
questions in the census, they will need to conduct a follow up survey
in order to collect more in-depth information on acreage, yield/
production, inventory, production practices, sales and expenses,
marketing channels, and demographics. We request $1 million be
appropriated to the USDA National Agriculture Statistics Service for
collection of organic price information, authorized by the ``Organic
Production and Market Data Initiative'' included in Section 7407 of the
2002 farm bill.
USDA AGRICULTURAL MARKETING SERVICE
Organic Price Collection: $1 million
Wholesale and retail price information is critical to farmers and
ranchers, but organic producers have fewer resources for price
information than conventional producers. Organic price information is
particularly important for insuring that organic producers receive
appropriate payment from Federal crop insurance when they incur a loss.
We request $1 million be appropriated to the USDA Agricultural
Marketing Service for collection of organic price information,
authorized by the ``Organic Production and Market Data Initiative''
included in Section 7407 of the 2002 farm bill.
Organic Certification Cost Sharer: $1.5 million
For small to medium scale producers and handlers, the cost of
organic certification can be a significant impediment to entry into the
USDA Organic Program. The cost of the program are not confined to
initial certification, in fact many small and medium sized producers
often cite the ongoing annual cost burden of maintaining organic
certification as an obstacle to staying in the USDA National Organic
Program. The Organic Certification Cost Share Program was created to
ease the cost burden of certification by providing up to 75 percent (to
a maximum of $500) of certification costs, but the $5 million provided
in the 2002 Farm Bill has now been expended at the Federal level
(although a few states have some residual funding which they are still
in the process of dispersing to producers or handlers). We urge the
committee to direct $1.5 million in funds of the Commodity Credit
Corporation as a stopgap measure to continue the National Organic
Certification Cost Share Program authorized in Section 10606 of the
2002 Farm Bill.
Organic Standards: $3.13 million
The national organic standards, which have been in effect since
October 31, 2002, provide a uniform national standard for the term
``organic'' that ensures consumer confidence in American organic
products. The rules, however, will have little effect unless it is
properly enforced thereby protecting both consumers and producers of
organic products. Additional funding is needed to investigate
complaints, on-site auditing of certifiers (for accreditation
purposes), and certifier training programs. In fiscal year 2005,
Congress appropriated $2 million to AMS for Organic Standards. For
2007, we support the President's request of $3.13 million to expand
enforcement and compliance of the National organic standards.
Additionally, we request the following report language be included:
``The Committee is encouraged that the Agency has hired an Executive
Director for the National Organic Standards Board (NOSB), as well as a
new Director for the National Organic Program. The Committee also notes
that the audits performed by the American National Standards Institute
(ANSI) in 2004 and by the USDA Office of Inspector General (OIG) in
2005 made strong recommendations about changes needed in the
administration of the National Organic Program. The Committee expects
the Agency to take the necessary actions to comply with these
recommendations, and to provide a written report to the Committee by
December of 2006 regarding the progress in implementing these
recommendations. In addition, the Committee expects to be kept abreast
of the complaints that the NOP has received about violations of the
organic standards, and the progress of the Agency in investigating and
responding to those complaints. Finally, the Committee expects the NOP
to work closely with the NOSB to implement the Peer Review Panel
requirements of OPFA and USDA's organic regulations.''
USDA NATURAL RESOURCES CONSERVATION SERVICE
Conservation Security Program (Csp): Full Funding
The Conservation Security Program is a comprehensive stewardship
incentives program that provides financial and technical assistance to
farmers and ranchers nationwide to reward them for creating public
benefits such as clean water, clean air, wildlife habitat, and long-
term carbon storage. Such assistance is of particular importance to the
organic producers, many of whom already implement practices outlined in
this program. We seek full funding for the CSP as a nationwide
conservation entitlement program.
Environmental Quality Incentives Program (Equip): Language supporting
incentive payments for transitioning to organic production
The Environmental Quality Incentives Program (EQIP) is a voluntary
conservation program for farmers and ranchers that promotes
agricultural production and environmental quality as compatible
national goals. EQIP offers financial and technical help to assist
eligible participants install or implement structural and management
practices on eligible agricultural land.
Incentive payments may be provided for up to three years to
encourage producers to carry out management practices they may not
otherwise use without the incentive. Some states, including
Massachusetts, Montana, and Minnesota have used incentive payments to
support producers transitioning to organic production. These transition
incentives payment programs assist farmers who choose to convert new
acreage to organic production. To qualify, farmers must apply at their
local NRCS offices, file organic system plans, and be inspected by a
USDA-accredited certifying agent. We urge the Committee to encourage
more states to make such programs available by adding language that
says: ``funds may be used for incentive payments for transition to
organic production''.
USDA RURAL BUSINESS-COOPERATIVE SERVICE
Appropriate Technology Transfer for Rural Areas (ATTRA): $3.9 million
ATTRA, is a national sustainable agriculture information service
managed by the National Center for Appropriate Technology. It provides
information and other technical assistance to farmers, ranchers,
Extension agents, educators, and others involved in sustainable
agriculture in the United States. The ATTRA website receives hundreds
of thousands of visitors annually. Often written in response to
questions from organic farmers, the ATTRA publications cover specific
issues about the most widely produced organic crops. With the continued
rapid growth of the organic industry, we anticipate an increase in
demand for ATTRA services in the coming year. Because ATTRA
specifically provides accurate and up-to-date technical information
relating to organic agricultural practices we request that it be funded
at $3.9 million.
Thank you for your consideration of these requests. Supporting
organic agriculture, by appropriating adequate funding for these
programs provides critical, cost-effective benefits for U.S. producers
and consumers.
______
Prepared Statement of the Organization for the Promotion and
Advancement of Small Telecommunications Companies
SUMMARY OF REQUEST
The Organization for the Promotion and Advancement of Small
Telecommunications Companies (OPASTCO) seeks the Subcommittee's support
for fiscal year 2007 loan levels for the telecommunications loans
program administered by the Rural Utilities Service (RUS) in the
following amounts:
[Millions of dollars]
------------------------------------------------------------------------
------------------------------------------------------------------------
5 percent hardship loans................................ 145
Treasury rate loans..................................... 250
Guaranteed loans........................................ \1\ 300
------------------------------------------------------------------------
\1\ Note: The $300 million requested for guaranteed loans includes $175
million in funding that was previously available through the Rural
Telephone Bank (RTB). The dissolution of the RTB necessitates
additional funds for RUS telecommunications loans in order to maintain
the level of funds available to rural telecommunications borrowers.
In addition, OPASTCO requests that the distance learning,
telemedicine, and broadband program be funded at sufficient levels.
OPASTCO is a national trade association of approximately 550 small
telecommunications carriers serving primarily rural areas of the United
States. Its members, which include both commercial companies and
cooperatives, together serve over 3.5 million customers in 47 States.
Perhaps at no time since the inception of the RUS (formerly the
REA) has the telecommunications loans program been so vital to the
future of rural America. The telecommunications industry is at a
crossroads, both in terms of technology and public policy. Rapid
advances in telecommunications technology in recent years have begun to
deliver on the promise of a new ``information age.'' Both federal and
state policymakers have made deployment of advanced communications
services a top priority. However, without continued support of RUS's
telecommunications loans program, rural telephone companies will be
hard pressed to continue building the infrastructure necessary to bring
their communities into this new age and achieve policymakers'
objectives.
Contrary to the belief of some critics, RUS's job is not finished.
Actually, in a sense, it has just begun. We have entered a time when
advanced services and technology--such as fiber-to-the-home, high-speed
packet and digital switching equipment, and digital subscriber line
technology--are expected by customers in all areas of the country, both
urban and rural. Moreover, the ability of consumers to use increasingly
popular Voice over Internet Protocol (VoIP) services requires that they
first have a broadband connection from a facilities-based carrier.
Unfortunately, the inherently higher costs of upgrading the rural
wireline network, both for voice and data communications, has not
abated.
Rural telecommunications continues to be more capital intensive and
involves fewer paying customers than its urban counterpart. In the
FCC's September 2004 report on the deployment of advanced
telecommunications capability, the Commission correctly noted that
``[r]ural areas are typically characterized by sparse and disperse
populations, great distances between the customer and the service
provider, and difficult terrain. These factors present a unique set of
difficulties for providers attempting to deploy broadband services.''
Thus, in order for rural telephone companies to continue modernizing
their networks and providing consumers with advanced services at
reasonable rates, they must have access to reliable low-cost financing.
The relative isolation of rural areas increases the value of
telecommunications for these citizens. Telecommunications enables
applications such as high-speed Internet connectivity, distance
learning, and telemedicine that can alleviate or eliminate some rural
disadvantages. A modern telecommunications infrastructure can also make
rural areas attractive for some businesses and result in revitalization
of the rural economy. For example, businesses such as telemarketing and
tourism can thrive in rural areas, and telecommuting can become a
realistic employment option. Certainly, telecommunications plays a
major role in any rural community's economic development strategy, with
the existence of modern and advanced telecommunications infrastructure
being a major enabling factor in the development of small business and
manufacturing enterprises in rural areas.
While it has been said many times before, it bears repeating that
RUS's telecommunications loans program is not a grant program. The
funds loaned by RUS are used to leverage substantial private capital,
creating public/private partnerships. For a very small cost, the
government is encouraging tremendous amounts of private investment in
rural telecommunications infrastructure. Most importantly, the program
is tremendously successful. Borrowers actually build the infrastructure
and the government is reimbursed with interest.
In addition to RUS's telecommunications loans program, OPASTCO
supports adequate funding of the distance learning, telemedicine, and
broadband program. Through distance learning, rural students gain
access to advanced classes which will help them prepare for college and
jobs of the future. Telemedicine provides rural residents with access
to quality health care services without traveling great distances to
urban hospitals. Furthermore, funding that is targeted to finance the
installation of broadband transmission capacity will allow more rural
communities to gain high-speed access to the Internet and receive other
advanced services. In light of the Telecommunications Act's purpose of
encouraging deployment of advanced technologies and services to all
Americans--including schools and health care providers--sufficient
targeted funding for these purposes is essential in fiscal year 2007.
CONCLUSION
The development of the nationwide telecommunications network into
an information superhighway, as envisioned by policymakers, will help
rural America survive and prosper in any market--whether local,
regional, national, or global. However, without the availability of
low-cost RUS funds, building the information superhighway in
communities that are isolated and thinly populated will be untenable.
By supporting the RUS telecommunications programs at the requested
levels, the Subcommittee will be making a significant contribution to
the future of rural America.
______
Prepared Statement of the Pickle Packers International, Inc.
The pickled vegetable industry strongly supports and encourages
your committee in its work of maintaining and guiding the Agricultural
Research Service. To accomplish the goal of improved health and quality
of life for the American people, the health action agencies of this
country continue to encourage increased consumption of fruits and
vegetables in our diets. Accumulating evidence from the epidemiology
and biochemistry of heart disease, cancer and diabetes supports this
policy. Vitamins (particularly A, C, and folic acid) and a variety of
antioxidant phytochemicals in plant foods are thought to be the basis
for correlation's between high fruit and vegetable consumption and
reduced incidence of these debilitating and deadly diseases. The
problem is that many Americans choose not to consume the variety and
quantities of fruits and vegetables that are needed for better health.
As an association representing processors that produce over 85
percent of the tonnage of pickled vegetables in North America, it is
our goal to produce new products that increase the competitiveness of
U.S. agriculture as well as meet the demands of an increasingly diverse
U.S. population. The profit margins of growers continue to be narrowed
by foreign competition. Likewise, the people of this country represent
an ever-broadening array of expectations, tastes and preferences
derived from many cultural backgrounds. Everyone, however, faces the
common dilemma that food costs should remain stable and preparation
time continues to be squeezed by the other demands of life. This
industry can grow by meeting these expectations and demands with
reasonably priced products of good texture and flavor that are high in
nutritional value, low in negative environmental impacts, and produced
with assured safety from pathogenic microorganisms and from those who
would use food as a vehicle for terror. With strong research to back us
up, we believe our industry can make a greater contribution toward
reducing product costs and improving human diets and health.
Many small to medium sized growers and processing operations are
involved in the pickled vegetable industry. We grow and process a group
of vegetable crops, including cucumbers, peppers, carrots, onions,
garlic, cauliflower, cabbage (Sauerkraut) and Brussels sprouts, which
are referred to as minor' crops. None of these crops is in any
``commodity program'' and as such, do not rely upon taxpayer subsidies.
However, current farm value for just cucumbers, onions and garlic is
$2.3 billion with an estimated processed value of $5.8 billion. These
crops represent important sources of income to farmers, and the
processing operations are important employers in rural communities
around the United States. Growers, processing plant employees and
employees of suppliers to this industry reside in all 50 States. To
realize its potential in the rapidly changing American economy, this
industry will rely upon a growing stream of appropriately directed
basic and applied research from four important research programs within
the Agricultural Research Service.
VEGETABLE CROPS RESEARCH LABORATORY, MADISON, WISCONSIN
The USDA/ARS Vegetable Crops Research Lab at the University of
Wisconsin is the only USDA research unit dedicated to the genetic
improvement of cucumbers, carrots, onions and garlic. Three scientists
in this unit account for approximately half of the total U.S. public
breeding and genetics research on these crops. Their past efforts have
yielded cucumber, carrot and onion cultivars and breeding stocks that
are widely used by the U.S. vegetable industry (i.e., growers,
processors, and seed companies). These varieties account for over half
of the farm yield produced by these crops today. All U.S. seed
companies rely upon this program for developing new varieties, because
ARS programs seek to introduce economically important traits (e.g.,
virus and nematode resistance) not available in commercial varieties
using long-term high risk research efforts. The U.S. vegetable seed
industry develops new varieties of cucumbers, carrots, onions, and
garlic and over twenty other vegetables used by thousands of vegetable
growers. The U.S. vegetable seed, grower, and processing industry,
relies upon the USDA/ARS Vegetable Crops Research Lab for unique
genetic stocks to improve varieties in the same way the U.S. health
care and pharmaceutical industries depend on fundamental research from
the National Institutes of Health. Their innovations meet long-term
needs and bring innovations in these crops for the United States and
export markets, for which the United States has successfully competed.
Past accomplishments by this USDA group have been cornerstones for the
U.S. vegetable industry that have resulted in increased profitability,
and improved product nutrition and quality.
Both consumers and the vegetable production and processing industry
would like to see fewer pesticides applied to food and into the
environment in a cost-effective manner. Scientists in this unit have
developed a genetic resistance for many major vegetable diseases that
are perhaps the most important threat to sustained production of a
marketable crop for all vegetables. Genetic resistance assures
sustainable crop production for growers and reduces pesticide residues
in our food and environment. Value of this genetic resistance developed
by the vegetable crops unit is estimated at $670 million per year in
increased crop production, not to mention environmental benefits due to
reduction in pesticide use. New research progress initiated in the
1990s and continuing today in Madison has resulted in cucumbers with
improved disease resistance, pickling quality and suitability for
machine harvesting. New sources of genetic resistance to viral and
fungal diseases, environmental stress resistance like heat and cold,
and higher yield have recently been mapped on cucumber chromosomes to
provide a ready tool for our seed industry to significantly accelerate
the development of resistant cultivars for U.S. growers. Nematodes in
the soil deform carrot roots to reduce yield from 10 percent to over 70
percent in major production areas. A new genetic resistance to nematode
attack was recently discovered and found to almost completely protect
the carrot crop from one major nematode. This group improved both
consumer quality and processing quality of vegetables with a resulting
increase in production efficiency and consumer appeal. This product was
founded on carrot germplasm developed in Madison, Wisconsin. Carrots
provide approximately 30 percent of the U.S. dietary vitamin A. With
new carrots that have been developed, nutritional value of this crop
has tripled, including the development of nutrient-rich cucumbers with
increased levels of provitamin A. Using new biotechnological methods, a
system for rapidly and simply identifying seed production ability in
onions has been developed that reduces the breeding process up to 6
years! A genetic map of onion flavor and nutrition will be used to
develop onions that are more appealing and healthy for consumers.
Garlic is a crop familiar to all consumers, but it has not been
possible to breed new garlic varieties until a new technique for garlic
seed production was recently developed and is now being bred like other
crops.
There are still serious vegetable production problems which need
attention. For example, losses of cucumbers, onions, and carrots in the
field due to attack by pathogens and pests remains high, nutritional
quality needs to be significantly improved and U.S. production value
and export markets could certainly be enhanced. Genetic improvement of
all the attributes of these valuable crops are at hand through the
unique USDA lines and populations (i.e., germplasm) that are available
and the new biotechnological methodologies that are being developed by
the group. The achievement of these goals will involve the utilization
of a wide range of biological diversity available in the germplasm
collections for these crops. Classical plant breeding methods combined
with bio-technological tools such as DNA marker-assisted selection and
genome maps of cucumber, carrot and onion will be the methods to
implement these genetic improvements. With this, new high-value
vegetable products based upon genetic improvements developed by our
USDA laboratories can offer vegetable processors and growers expanded
economic opportunities for United States and export markets.
U.S. FOOD FERMENTATION LABORATORY, RALEIGH, NORTH CAROLINA
The USDA/ARS Food Fermentation Laboratory in Raleigh, NC is the
major public laboratory that this industry looks to as a source for new
scientific information on the safety of our products and development of
new processing technologies related to fermented and acidified
vegetables. Over the years this laboratory has been a source for
innovations, which have helped industry remain competitive in the
current global trade environment. We expect the research done in this
laboratory to lead to new processing and product ideas that will
increase the economic value of this industry and provide consumers with
safe, high quality, healthful vegetable products.
To maintain the current level of research we request that Congress
restore the funding increases provided in the fiscal year 2004
($270,000) and fiscal year 2005 ($100,000) budgets. It is very
important that Congress restore the full $370,000 in the fiscal year
2007 budget, since the funds were not included in the budget sent to
the Congress.
We seek additional funding to support two new research directions
for this laboratory that have substantial economic potential for our
industry and health benefits for the American public. These are: (1)
Preservation of a variety of high nutrient/high antioxidant vegetables
using fermentation or acidification techniques so as to maintain the
natural levels of beneficial phyotochemicals in convenient to use
value-added products; (2) development of techniques to deliver living
pro-biotic microorganisms to consumers in fermented or acidified
vegetable products.
Certain vitamins and beneficial phytochemicals in vegetables are
stabilized by the low pH in acidified and fermented foods. In addition,
low pH makes it possible to preserve vegetables with low heat or,
ideally, no heat. While many high nutrient/high antioxidant vegetables
are pickled to a very limited extent, traditional processes typically
include steps that lose many of the health-promoting components that
diet authorities emphasize when they urge people to increase their
consumption of fruits and vegetables. The objective will be develop new
acid preservation techniques for broccoli, Brussel sprouts, sweet
potato, cauliflower, and peppers that will provide high levels of
vitamin C, folic acid, carotenoids, glucosinolates, and phenolic
compounds to maximize the health benefits of these vegetables in
products that are convenient and attractive to consumers.
Most of what we hear about bacteria in foods concerns the pathogens
that cause disease. However, lactic acid bacteria are intentionally
grown in fermented foods because they are needed to give foods like
sauerkraut, yoghurt, cheeses, and fermented salami the characteristic
flavors and textures that we desire. There is a growing body of
research to indicate that certain living lactic acid bacteria are pro-
biotic' and can improve human health by remaining in the intestinal
tract after they are consumed. Fermented or acidified vegetables may be
a good way to deliver such pro-biotic bacteria to consumers. The
objective will be to identify pro-biotic lactic acid bacteria that can
survive in high numbers in selected vegetable products and investigate
the potential for using vegetables as healthful delivery vehicles for
pro-biotic organisms.
SUGAR BEET AND BEAN RESEARCH UNIT, EAST LANSING, MICHIGAN
The USDA/ARS cucumber post harvest engineering research at East
Lansing, Michigan, is the only federally funded program that is devoted
to developing new and/or improved engineering methods and technology
for assessing, retaining, and assuring post harvest quality,
marketability, and wholesomeness of pickling cucumbers and other
vegetable products. The cucumber post harvest engineering research is
one component of the post harvest engineering research program within
the Sugar Beet and Bean Research Unit in East Lansing, Michigan. The
post harvest engineering research program currently has a full-time
research agricultural engineer whose primary research is to develop
methods and technology for assessing and assuring post harvest quality
of tree fruits. Because of severe under-funding, the location's
cucumber post harvest engineering research has not been carried out at
the full scope it would have been expected. A postdoctoral research
associate has been hired to conduct research on developing
nondestructive technology for assessing and grading pickling cucumbers
and other vegetables. The ARS East Lansing location has been
internationally recognized for developing innovative, practical
engineering methods and techniques to improve harvest and post harvest
handling systems for vegetables and tree fruits. The location recently
developed a new laser-based multi-spectral imaging technology for
grading and sorting fruit for texture and soluble solids content. The
technology has the potential for inspecting a variety of vegetable
crops including cucumbers. The location also developed an advanced
hyper-spectral imaging system for automated detection of defects and
quality attributes of fruit, which could be used for pickling cucumber
inspection.
Today, consumers have increasing choices of foods and they are
demanding for better, consistent safe products. Defective and inferior
cucumbers/vegetables will lead to poor quality, inconsistent pickled
products and can cause significant economic losses to growers and
processors. An effective quality control and assurance system
throughout the handling steps between harvest and retail is required
for the pickling industry to provide consistent, superior products to
the marketplace. Methods currently available for measuring and grading
quality of cucumbers and other vegetables are either ineffective or
time consuming. New and/or improved technologies are needed to assess,
inspect and grade fresh cucumbers rapidly and accurately for various
internal and external quality characteristics so that raw products can
be directed to, or removed from, appropriate processing or marketing
avenues. This will minimize post harvest losses of food that has
already been produced and ensure high quality, consistent final product
and end-user satisfaction. Current research at East Lansing is focused
on developing rapid inspection techniques for detecting and segregating
defective cucumbers to assure the keeping and processing quality of
pickling cucumbers. The research will lead to new inspection and
grading technology that will help the pickling industry in delivering
high-quality safe products to the marketplace. To enhance research on
the development of engineering methods and technology for assuring post
harvest quality and marketability of pickled and vegetable products, a
full-time research scientist (engineering) will be needed for the ARS
East Lansing research program.
U.S. VEGETABLE LABORATORY, CHARLESTON, SOUTH CAROLINA
The research program at the USDA/ARS Vegetable Laboratory in
Charleston, South Carolina, addresses national problems in vegetable
crop production and protection with emphasis on the southeastern United
States. This research program is internationally recognized for its
accomplishments, which have resulted in development of over 150 new
vegetable varieties and lines along with the development of many new
and improved disease and pest management practices. This laboratory's
program currently addresses 14 vegetable crops including those in the
cabbage, cucumber, and pepper families, which are of major importance
to the pickling industry. The mission of the laboratory is to (a)
develop disease and pest resistant vegetable crops and (b) develop new,
reliable, environmentally sound disease and pest management programs
that do not rely on conventional pesticides.
Continued expansion of the Charleston program is crucial. Vegetable
growers depend heavily on synthetic pesticides to control diseases and
pests. Cancellation and/or restrictions on the use of many effective
pesticide compounds are having a considerable influence on the future
of vegetable crop production. Without the use of certain pesticides,
growers will experience crop failures unless other effective, non-
pesticide control methods are found quickly. The research on improved,
more efficient and environmentally compatible vegetable production
practices and genetically resistant varieties at the U.S. Vegetable
Laboratory continues to be absolutely essential. This gives U.S.
growers the competitive edge they must have to sustain and keep this
important industry and allow it to expand in the face of increasing
foreign competition.
FUNDING NEEDS FOR THE FUTURE
It remains critical that funding continues the forward momentum in
pickled vegetable research that the United States now enjoys and to
increase funding levels as warranted by planned expansion of research
projects to maintain U.S. competitiveness. We also understand that
discretionary funds are now used to meet the rising fixed costs
associated with each location. Additional funding is needed at the
Wisconsin and South Carolina programs for genetic improvement of crops
essential to the pickled vegetable industry, and at North Carolina and
Michigan for development of environmentally-sensitive technologies for
improved safety and value to the consumer of our products. The
fermented and acidified vegetable industry is receptive to capital
investment in order to remain competitive, but only if that investment
is economically justified. The research needed to justify such capital
investment involves both short term (6-24 months) and long term (2-10
years or longer) commitments. The diverse array of companies making up
our industry assumes responsibility for short-term research, but the
expense and risk are too great for individual companies to commit to
the long-term research needed to insure future competitiveness. The
pickled vegetable industry currently supports research efforts at
Wisconsin and North Carolina and anticipates funding work at South
Carolina and Michigan as scientists are put in place. Donations of
supplies and processing equipment from processors and affiliated
industries have continued for many years.
U.S. Vegetable Laboratory, Charleston, South Carolina
The newly constructed laboratory-office building at the U.S.
Vegetable Laboratory was occupied in April 2003. Design of the
accompanying greenhouse and head house using the funds appropriated for
this purpose in fiscal year 2003 was completed in July 2004. In fiscal
year 2004, construction of the head house component of this project was
funded. The head house component of the project is now under
construction with an expected completion in late spring 2006. In fiscal
year 2005, $2.976 million was appropriated for construction of
greenhouses. In fiscal year 2006, an additional $1.980 million was
appropriated for construction of greenhouses, but $7.169 million is
still needed for the planned $12.125 million greenhouse complex. This
new facility replaces and consolidates outmoded laboratory areas that
were housed in 1930s-era buildings and trailers. Completion of the
total research complex will provide for the effective continuation and
expansion of the excellent vegetable crops research program that has
been conducted by the Agricultural Research Service at Charleston for
over 60 years. It is most critical to the mission of the U.S. Vegetable
Laboratory that the fiscal year 2002, fiscal year 2003, and fiscal year
2004 appropriated funds for expansion of the Charleston research staff
is maintained in fiscal year 2007. In addition, new funds are still
needed to hire additional scientists to expand the research program. An
Entomologist is needed to facilitate development of host resistance and
new management approaches to a wider range of established insect pests
of vegetable crops; a Molecular Biologist is needed to develop and
utilize molecular techniques for pathogen and pest population studies
necessary to development of new management approaches and resistant
genetic stocks. Both of these new scientific positions will greatly
contribute to the accomplishment of research that will provide for the
effective protection of vegetable crops from disease and pests without
the use of conventional pesticides. Each of these positions requires a
funding level of $400,000 for their establishment.
------------------------------------------------------------------------
Gross funds
Appropriations to restore Fiscal year impacted
------------------------------------------------------------------------
Minor Use Pesticides (IR-4)............. .............. $5,335
U.S. Vegetable Laboratory............... 2003 484,969
U.S. Vegetable Laboratory............... 2004 263,597
---------------
Total funds to restore............ .............. 753,901
------------------------------------------------------------------------
------------------------------------------------------------------------
New Funds
New Scientific Staff Needed Current Status Needed
------------------------------------------------------------------------
Entomologist...................... Needed.............. $400,000
Molecular Biologist............... Needed.............. 400,000
---------------
New funds needed............ .................... 800,000
------------------------------------------------------------------------
Food Fermentation Laboratory, Raleigh, North Carolina
The current funding for the laboratory is $1,274,000. This includes
the new funds provided in fiscal year 2004 ($270,000) and in fiscal
year 2005 ($100,000) that are not in the fiscal year 2007 budget
proposal that was sent to the Congress. We request that the additional
funding provided by the Congress in fiscal year 2004 and fiscal year
2005 be restored in the fiscal year 2007 budget.
To initiate and then increase the research initiatives to preserve
high nutrient/high antioxidant vegetables to maximize healthful
components and to determine how to deliver living pro-biotic lactic
acid bacteria in acidified and fermented vegetable products, we request
additional support for the Food Fermentation Laboratory of $100,000 in
fiscal year 2007 with the expectation that an additional $100,000 be
added each year from fiscal year 2008 through fiscal year 2011. This
will provide an ability to have an orderly growth of research effort in
these areas by supporting Post-Doctoral or Pre-Doctoral research
associates initially and then hiring a permanent scientist in the third
or fourth year to provide a long term research capability in the most
productive research areas.
------------------------------------------------------------------------
Scientific staff Current status Funds needed
------------------------------------------------------------------------
Microbiologist.................... Active.............. $318,500
Chemist........................... Active.............. 318,500
Food technologist/biochemist...... Active.............. 318,500
Microbial Physiologist............ Active.............. 318,500
Fiscal year 2007 post-doctoral or Needed.............. 100,000
predoctoral research associates.
---------------
Total funding required...... .................... 1,374,000
===============
Presidential Budget (fiscal year .................... 912,195
2007).
Appropriations to restore......... .................... 361,805
New funds needed.................. .................... 100,000
------------------------------------------------------------------------
Vegetable Crops Research Laboratory Unit, Madison, Wisconsin
Current base funding for three scientists is $835,900, of which
$200,000 was added in fiscal year 2002. An additional $64,100 is needed
to fully fund the scientists and support staff, including graduate
students and post-doctorates.
------------------------------------------------------------------------
Scientific staff in place Current status Funds needed
------------------------------------------------------------------------
Geneticist........................ Active.............. $300,000
Horticulturist.................... Active.............. 300,000
Geneticist........................ Active.............. 300,000
---------------
Total funding required...... .................... 900,000
===============
Presidential Budget (fiscal year .................... 641,911
2007).
Appropriations to restore......... .................... 193,989
New funds needed.................. .................... 64,100
------------------------------------------------------------------------
A temporary addition of $200,000 was provided to enhance the
research effort of this program in fiscal year 2002, and we greatly
appreciate that additional support, but that addition is being proposed
for reduction in fiscal year 2007. Thus, the restoration of the funds
proposed for reduction, is urgently requested. We request a $258,089
permanent addition this year to sustain the long-term research of this
group.
Sugar Beet and Bean Research Unit, East Lansing, Michigan
The location urgently needs to hire a full-time research engineer
to develop a comprehensive research program on nondestructive
inspection, sorting and grading of pickling cucumbers and other
vegetable crops to assure the processing and keeping quality of pickled
products. The current base funding for the cucumber engineering
research is $200,000. An increase of $100,000 in the current base
funding level would be needed to fund the research engineer position.
------------------------------------------------------------------------
Scientific staff in place Current status Funds needed
------------------------------------------------------------------------
Postdoctoral Research Associate... Active.............. $200,000
Research Engineer................. Needed.............. 100,000
---------------
Total funding required...... .................... 300,000
===============
Current Funding................... .................... 200,000
New funds needed.................. .................... 100,000
------------------------------------------------------------------------
Thank you for your consideration and expression of support for the
USDA/ARS.
______
Prepared Statement of the Red River Valley Association
Mr. Chairman and members of the Committee, I am Wayne Dowd, and I
am pleased to represent the Red River Valley Association as its
President. Our organization was founded in 1925 with the express
purpose of uniting the citizens of Arkansas, Louisiana, Oklahoma and
Texas to develop the land and water resources of the Red River Basin.
(Enclosure 1)
The Resolutions contained herein were adopted by the Association
during its 81st Annual Meeting in Bossier City, Louisiana on February
24, 2006, and represent the combined concerns of the citizens of the
Red River Basin Area as they pertain to the goals of the Association.
(Enclosure 2)
As an organization that knows the value of our precious water
resources we support the most beneficial water and land conservation
programs administered through the Natural Resources Conservation
Service (NRCS). We understand that attention and resources must be
given to our national security and the war in Iraq; however, we cannot
sacrifice what has been accomplished on our Nation's lands. NRCS
programs are a model of how conservation programs should be
administered and our testimony will address the needs of the Nation as
well as our region.
The President's fiscal year 2007 budget for NRCS indicates a
decrease of $216.4 million (21.5 percent decrease) from what Congress
appropriated in fiscal year 2006. In addition, the Administration
eliminated two crucial watershed programs: Watershed & Flood Prevention
Operations and Watershed Survey & Planning. Along with drastic
reductions in the other programs, NRCS manpower for fiscal year 2007
would have to decrease by over 1,500 staff years, if the President's
budget is implemented. This is unacceptable.
This means that NRCS assistance to landowners will not be
adequately funded, to the detriment of the Nation and our natural
resources. We would like to address several of the programs
administered by NRCS. Failure to adequately fund these initiatives
would reduce assistance to those who want it and the resources that
need protection.
Conservation Operations.--This account has been in steady decline,
in real dollars, over the past several years. The President's budget
included $745 million, which is a decrease of $94.5 million from what
you appropriated in fiscal year 2006. Mandated increases in pay and
benefits, continuing increases in the cost of doing business' and
budget reductions greatly reduces the effective work that can be
accomplished in this account. Allocations should be increased not
decreased.
We request a total of $930 million be appropriated for Conservation
Operations for NRCS to meet the demands it faces today.
Conservation Technical Assistance is the foundation of technical
support and a sound, scientific delivery system for voluntary
conservation to the private users and owners of lands in the United
States. It is imperative that we provide assistance to all working
lands' not just those fortunate few who are able to enroll in a Federal
program. Working lands are not just crops and pasture (commodity
staples) but includes forests, wildlife habitat and coastal marshes.
The problem is that NRCS personnel funded from mandatory programs' can
only provide technical assistance to those enrolled in these programs,
leaving the majority of the agricultural community without technical
assistance. We recommend that adequate funding be placed in
'Conservation Technical Assistance', and allow NRCS to provide
assistance to all who are in need of assistance.
It is our understanding that the Technical Service Providers (TSP)
program has not lived up to its expectations. Experience indicates
landowners are hesitant to use the program. This program funds projects
at a level estimated if NRCS conducted the work. Usually the TSP cost
exceeds this estimate and the landowner is responsible for the
difference, effectively making the landowner cost share. We believe
that TSPs should be used only after NRCS staffing is brought up to
levels commensurate with the increase in workload caused by the Farm
Bill, not to replace NRCS staffing.
Watershed and Flood Prevention Operations (Public Law 566 & 534).--
We are greatly disappointed that the President's Budget provided no
funding for watershed operations. There is no doubt that this is a
Federal responsibility, in conjunction with a local sponsor. This
program addresses all watershed needs to include: flood protection,
water quality, water supply and the ecosystem. There is no Corps of
Engineer, Bureau of Reclamation or FEMA program to address small
watershed needs, before disaster strikes. We recommend that Congress
continue to hold oversight hearings to understand the importance and
hear how popular this program is to our communities.
These projects have developed a $15 billion infrastructure that is
providing $1.5 billion in annual benefits to over 48 million people. It
is not a Federal program, but a Federally assisted program. This
partnership between local communities, State agencies and NRCS has been
successful for over 50 years. It would take $1.6 billion to fund the
existing Federal commitment to local project sponsors. This cost only
increases every year if adequate funding is not provided.
If you allow this program to end, all ongoing contracts will be
terminated. This will ultimately lead to lawsuits and tort claims filed
by both sponsors and contractors, due to the Federal government not
fulfilling its contractual obligation.
We are very appreciative for the funding level of $75 million
enacted in fiscal year 2006. It is reassuring to know that both the
House and Senate realize the importance of this program to the
agricultural community. For every $1 spent, the Nation realizes $2 in
benefits.
There are many new projects, which are awaiting funds for
construction under this program. We strongly recommend that a funding
level of $190 million be appropriated for Watershed Operations
Programs, Public Law 534 ($20 million) and Public Law 566 ($170
million).
The Red River has proven, through studies and existing irrigation,
to be a great water source for supplemental' irrigation. The two
projects mentioned below, will use existing, natural bayous to deliver
water for landowners to draw from. The majority of expense will be for
the pump system to take water from the Red River to the bayous. These
projects will provide the ability to move from ground water dependency
to surface water, an effort encouraged throughout the Nation. Both will
enhance the environmental quality and economic vitality of the small
communities adjacent to the projects.
--Walnut Bayou Irrigation Project, AR.--Plans and specifications have
been completed and it is ready to proceed into the construction
phase. An irrigation district has been formed and they are
prepared to take on the responsibility to generate the income
for the O&M required to support this project. We request that
$4,000,000 be appropriated for these projects in fiscal year
2007.
--Red Bayou Irrigation Project, LA.--The plans and specifications
have been completed, making this project ready for construction
in fiscal year 2007. An irrigation district has been formed and
is prepared to collect funds to support the O&M for this
proposed system. We request that $2,500,000 be specifically
appropriated to begin construction in fiscal year 2007.
Watershed Rehabilitation.--More than 10,400 individual watershed
structures have been installed nationally, with approximately one-third
in the Red River Valley. They have contributed greatly to conservation,
environmental protection and enhancement, economic development and the
social well being of our communities. More than half of these
structures are over 30 years old and several hundred are approaching
their 50-year life expectancy. Today you hear a lot about the watershed
approach to resource management. They protect more people and
communities from flooding now than when they were first constructed.
The benefit to cost ratio for this program has been evaluated to be
2.2:1. What other Federal program can claim such success?
In the next 5 years over 900 watershed structures will require over
$570 million for rehabilitation. Each year this number increases as
more dams reach their 50-year life. There is no questioning the value
of this program. The cost of losing this infrastructure exceeds the
cost to reinvest in our existing watersheds. Without repairing and
upgrading the safety of existing structures, we miss the opportunity to
keep our communities alive and prosperous. It would be irresponsible to
dismantle a program that has demonstrated such great return and is
supported by our citizens. We cannot wait for a catastrophe to occur,
where life is lost, to decide to take on this important work.
The President's budget neglects the safety and well being of our
community needs by allocating only $15 million for this program. This
is drastically lower than the levels authorized in the 2002 Farm Bill,
which authorized $600 million for rehabilitation for 2003-2007.
We request that $65 million be appropriated to provide financial
and technical assistance to those watershed projects where sponsors are
prepared (35 percent cost share) to commence rehabilitation.
Watershed Survey and Planning.--In fiscal year 2006, $6.1 million
was appropriated to support this extremely important community program.
NRCS has become a facilitator for the different community interest
groups, State and Federal agencies. In our States such studies are
helping identify resource needs and solutions where populations are
encroaching into rural areas. The Administration decided to eliminate
this program. We disagree with this and ask Congress to fund this
program at the appropriate level.
Proper planning and cooperative efforts can prevent problems and
insure that water resource issues are addressed. Zeroing out the
planning process assumes the economy will not grow and there is no need
for future projects. We do not believe anyone supports or believes
this. Another serious outcome is that NRCS will lose its planning
expertise, which is invaluable.
We request this program be funded at a level of $35 million.
We request that the following two studies be specifically
identified and funded in the fiscal year 2007 appropriation bill.
--Maniece Bayou Irrigation Project, AR.--This is a project in its
initial stage of planning. An irrigation district is being
formed to be the local sponsor. This project transfers water
from the Red River into Maniece Bayou where landowners would
draw water for supplemental irrigation. We request that
$200,000 be appropriated to initiate the plans and
specifications.
--Lower Cane River Irrigation Project, LA.--The transfer of water
from the Red River to the Lower Cane River will provide
opportunities for irrigation and economic development. Funds
are needed to initiate a Cooperative River Basin Study. We
request that $250,000 be appropriated for this study.
Resource Conservation and Development (RC&D).--This has
traditionally been a well-received program by the Administration, not
this year. Their budget proposal only had $27 million, far short of
national needs. This program leverages its resources at 4 to 1, with
communities, local sponsors and non-government organizations. The
benefits are realized at over 14 to 1, average per project. What other
Federal program can claim such a return on investment?
We request that $51 million be appropriated for this program, at
the same level as in fiscal year 2006.
Mandatory Accounts (CCC) Technical Assistance (TA).--Request for
assistance through the CCC programs has been overwhelming. Requests far
exceed the available funds and place an additional workload on NRCS's
delivery system. Adequate funding for TA must be provided at the full
cost for program delivery. This includes program administration,
conservation planning and contracting with each applicant. Congress, in
the 2002 Farm Bill, wisely increased conservation programs each year.
This increased investment, with the multi-year CCC programs, will
increase the NRCS workload. It is imperative that NRCS receive the TA
funding levels required to administer these programs. If they do not
receive full funding these programs will not realize their full
capability.
It has been mandated that a set percent of TA, from the CCC
Program, must be used for TSPs, approximately $40 million. This is
equivalent to losing 600 staff years from NRCS manpower. This is
another unacceptable policy, which will reduce the effectiveness of
NRCS. This mandate must be eliminated.
Over 70 percent of our land is privately owned. This is important
in order to understand the need for NRCS programs and technical
assistance. Their presence is vital to ensuring sound technical
standards are met in conservation. These programs not only address
agricultural production, but sound natural resource management. Without
these programs and NRCS properly staffed to implement them, many
private landowners will not be served adequately to apply conservation
measures needed to sustain our natural resources for future
generations. Technical Assistance cannot be contracted out to private
companies.
We are all aware of the issue with TMDL levels in our waterways. If
our Nation is to seriously address this we must look at the impacts
from our farmlands. Assistance for land treatment plans and plan
implementation is exactly what the NRCS Watershed programs are intended
to address. Watershed programs should be receiving an increase in
funds, not zeroed out!
With these new clean water initiatives why do we ignore the agency
that has a proven record for implementing watershed conservation
programs? Congress must decide; will NRCS continue to provide the
leadership within our communities to build upon the partnerships
already established? It is up to Congress to insure NRCS is properly
funded and staffed to provide the needed assistance to our taxpayers
for conservation programs.
These NRCS studies and watershed projects are an example of true
``cooperative conservation'' initiatives. There is an interface with
communities and local sponsors at each step of the process and local
sponsors do cost share at the levels expected of them.
All these programs apply to the citizens in the Red River Valley
and their future is our concern. The RRVA is dedicated to work toward
the programs that will benefit our citizens and provide for high
quality of life standards. We therefore request that you appropriate
the requested funding within these individual programs, to insure our
Nation's conservation needs are met.
I thank you for the opportunity to present this testimony on behalf
of the members of the Red River Valley Association and we pledge our
support to assist you in the appropriation process.
ENCLOSURE 1.--RED RIVER VALLEY ASSOCIATION
The Red River Valley Association is a voluntary group of citizens
bonded together to advance the economic development and future well
being of the citizens of the four State Red River Basin area in
Arkansas, Louisiana, Oklahoma and Texas.
For the past 80 years, the Association has done notable work in the
support and advancement of programs to develop the land and water
resources of the Valley to the beneficial use of all the people. To
this end, the Red River Valley Association offers its full support and
assistance to the various Port Authorities, Chambers of Commerce,
Economic Development Districts, Municipalities and other local
governmental entities in developing the area along the Red River.
The Resolutions contained herein were adopted by the Association
during its 80th Annual Meeting in Bossier City, Louisiana on February
24, 2005, and represent the combined concerns of the citizens of the
Red River Basin area as they pertain to the goals of the Association,
specifically:
--Economic and Community Development
--Environmental Restoration
--Flood Control
--Irrigation
--Bank Stabilization
--A Clean Water Supply for Municipal, Industrial and Agricultural
Uses
--Hydroelectric Power Generation
--Recreation
--Navigation
The Red River Valley Association is aware of the constraints on the
Federal budget, and has kept those constraints in mind as these
Resolutions were adopted. Therefore, and because of the far-reaching
regional and national benefits addressed by the various projects
covered in the Resolutions, we urge the members of Congress to review
the materials contained herein and give serious consideration to
funding the projects at the levels requested.
ENCLOSURE 2.--RED RIVER VALLEY ASSOCIATION FISCAL YEAR 2007 APPROPRIATIONS--NATURAL RESOURCES CONSERVATION
SERVICE (NRCS)
[Thousands of dollars]
----------------------------------------------------------------------------------------------------------------
Fiscal year Fiscal year Pres. 2007
Discretionary accounts 2006 approp. 2007 request budget
----------------------------------------------------------------------------------------------------------------
Conservation Operations......................................... 839,519 930,000 745,000
Watershed & Flood Prevention Operations......................... 75,000 190,000 ..............
Walnut Bayou Irrigation Project, AR......................... .............. 4,000 ..............
Red Bayou Irrigation Project, LA............................ .............. 1,600 ..............
Watershed Rehabilitation........................................ 31,516 65,000 15,000
Watershed Survey & Planning..................................... 6,083 35,000 ..............
Maniece Bayou Irrigation Project, AR........................ .............. 200 ..............
North Wallace Lake Watershed, LA............................ .............. 250 ..............
Resource Conservation & Development (RC&D)...................... 51,300 51,000 27,000
Healthy Forest Reserve Program.................................. 2,475 5,000 2,475
----------------------------------------------------------------------------------------------------------------
______
Prepared Statement of the Society for Animal Protection Legislation
$1.5 Million for the Animal Welfare Information Center (AWIC) at the
National Agricultural Library
The Animal Welfare Information Center was established by the
Improved Standards for Laboratory Animals Act (the 1985 amendment to
the Animal Welfare Act) to serve as a clearinghouse, training center
and educational resource for institutions using animals in research,
testing and teaching. A primary purpose of the Center is to help
research laboratories comply with the requirements of the Federal law.
The Center provides data on alleviating or reducing pain and distress
in experimental animals (including anesthetic and analgesic
procedures), reducing the number of animals who must be used for
research where possible, and identifying alternatives to the use of
animals for specific research projects. The AWIC was also charged with
providing information to prevent the unintended duplication of animal
experiments.
We greatly appreciate the past support Congress has provided to the
AWIC to carry out its programs: $750,000 and an add-on of $400,000. It
is essential to maintain the existing level of support therefore a
minimum base of $1.15 million is needed on an annual basis. We are
respectfully requesting an additional $350,000 for desperately needed
expansion in fiscal year 2007 including increased educational workshops
and exhibits presented throughout the United States, increased
production and printing of educational material and increased staffing
to meet the demand for services.
There is general consensus between the biomedical research industry
and the animal welfare community about the need for increased funding.
In fact, myriad individuals representing these disparate interests have
agreed on the need for $1.5 million in funding for the Animal Welfare
Information Center (see attached letter). The AWIC is able to help
improve the conduct of research, including the care provided to the
animals who are used, thereby ensuring a reduction in variables which
might skew the research. Better science is the end result.
The $1,500,000 would be used as follows: staff salary and benefits
($1,073,000), exhibitions conducted at major scientific conferences
($53,600), preparation and conduct of educational workshops across the
country ($16,800), educational workshops conducted at the Center
($4,100), printing and reproduction of paper and electronic material
($29,200), training for the NAL staff ($13,900), acquisition of,
including electronic access to, data ($38,000), internet services
($20,400), office supplies including hardware and software ($26,000)
and the overhead that must be provided to the Agricultural Research
Service and the National Agricultural Library (at least $225,000).
The Center's mandate necessitates the collection and dissemination
of material on humane housing and husbandry, the functions and
responsibilities of Institutional Animal Care and Use Committees
(IACUCs), animal behavior, improved methodologies, psychological well-
being of primates and exercise for dogs. The AWIC has expanded to
include the broader industry regulated under the Animal Welfare Act:
animal dealers, carriers and handlers, zoos and other exhibitors. Other
topics covered by the Center include animal diseases, animal models,
animal training and environmental enrichment for all species. USDA
Animal Care's veterinary medical officers and animal care inspectors
are able to utilize the full range of services provided by the AWIC to
better fulfill their responsibilities.
The AWIC is the single most important resource for helping research
facility personnel meet their responsibilities under the Animal Welfare
Act. There are more than 1,200 research facilities nationwide, and the
services of the AWIC are available to all individuals at these
institutions including the cage washers, animal technicians, research
investigators, attending veterinarians, IACUC representatives including
the nonaffiliated member, and the Institutional Official. The Office of
Inspector General (OIG) audit titled ``APHIS Animal Care Program
Inspection and Enforcement Activities'' cited an increase in apparent
violations of the AWA by research facilities over the past few years.
There appears to be a significant problem with the oversight provided
IACUCs and training for IACUC members is encouraged. In response to
this need, we are requesting funds to allow--for the first time--AWIC
to conduct workshops at locations around the country rather than being
limited to conducting them only from the Center's base in Maryland.
The AWIC website (http:www.nal.usda.gov/awic) received more than 27
million hits in fiscal year 2005 (one of the most accessed sites at the
NAL). 300,000 documents were distributed via the web and more than
12,000 hard copies were distributed as well. Exhibitions and/or
presentations were provided at the following venues: American
Association for Laboratory Animal Science (AALAS) annual meeting,
National Capital Area Branch AALAS, Tribranch AALAS, Society of
Neuroscience, New Jersey Association for Biomedical Research, American
Veterinary Medical Association, Combined Animal Science meeting,
International Conference on Environmental Enrichment, American
Association for the Advancement of Science and the 5th World Congress
on the Use of Animals in the Life Sciences, Scientists Center for
Animal Welfare meetings and the Public Responsibility in Medicine and
Research annual meeting.
The AWIC works closely with both APHIS Animal Care and with
Emergency Veterinary Services on emerging crises such as the highly
pathogenic Avian Influenza. The Center is focused on transmissible
spongiform encephalopathy, exotic Avian Newcastle disease,
tuberculosis, West Nile Virus and micro-bacterial diseases too.
A proposal was made to create a ``Center for Excellence'' within
Animal Care, but we oppose this effort as an enormous misuse of funds.
There is no need to pay for a site and hire new staff because much of
the work proposed for such a Center for Excellence is already covered
effectively and efficiently by the AWIC. We would, however, support
further expansion of the AWIC at its current location within the
National Agricultural Library. The AWIC has a record spanning nearly
two decades that demonstrates its abilities to serve.
$19.143 Million for APHIS/Animal Care's Enforcement of the Animal
Welfare Act
The Animal Welfare Act (AWA) is the chief Federal law for the
protection of animals. The USDA seeks compliance with its minimum
standards for the care and treatment of animals during transportation
and at the nearly 13,000 sites of dealers, research, testing and
teaching facilities, zoos, aquariums, circuses, carriers (airlines,
motor freight lines and other shipping businesses) and handlers (ground
freight handlers). There are a mere 101 Veterinary Medical Officers
(VMOs) and Animal Care Inspectors (ACIs) conducting searches, pre-
licensing inspections and enforcement inspections across the country.
In fiscal year 2005, 575 cases were brought regarding violations of
the AWA and more than $1.1 million dollars was received in fines and
stipulations. These enforcement actions help ensure the protection of
both animals and people as evidenced by the OIG Audit released this
fall.
We support the President's request for $19.143 million for
enforcement of the AWA. We hope the additional funds will permit USDA
to hire 15 additional inspectors and to conduct a national meeting
(with all inspectors in attendance). There were insufficient funds for
USDA to conduct a workshop this fiscal year, and a national meeting
must be held next year; it is vital as it provides proper training of
inspectors and ensures a high and equal standard of enforcement is
being implemented by the field inspectors nationwide. The cost for a
national meeting is expected to be $150,000.
In 1966 the Laboratory Animal Welfare Act (later renamed the Animal
Welfare Act) was adopted in an effort to prevent the sale of lost or
stolen pets into research. Nevertheless, this has continued to be a
serious problem. Sound enforcement by USDA has reduced the number of
random source dealers in live dogs and cats to 10. More than half of
these are currently under investigation by USDA for their failure to
comply with the law. A recent Home Box Office documentary film, Dealing
Dogs, highlighted the problems that plague this cottage industry. The
committee could save Animal Care significant resources and aggravation
if it brought an end to this illicit trade by including report language
prohibiting the sale of dogs and cats to research by random source
dealers. Animals needed for research purposes can be obtained from
other sources including licensed breeders. This would ensure integrity
in the supply of dogs and cats for research purposes.
$750,000 for APHIS/Animal Care's Enforcement of the Horse Protection
Act
More than thirty years have passed since the Horse Protection Act
was adopted by Congress, yet soring of Tennessee Walking Horses
continues to be a widespread problem. Soring is defined by APHIS as
``the application of any chemical or mechanical agent used on any limb
of a horse or any practice inflicted upon the horse that can be
expected to cause it physical pain or distress when moving.'' Horses
are sored to produce an exaggerated gait.
The most effective method of reducing the showing of horses who
have been sored is to have Animal Care (AC) inspectors present at the
shows. Oftentimes, as soon as an AC inspector arrives at a show, there
is a rush to put horses back into trailers and haul them away. If the
likelihood that an AC inspector will show up increases significantly,
this will have a huge deterrent effect on those who routinely sore
their horses.
AC was only able to attend 32 events in fiscal year 2004 out of a
total of approximately 865 shows. $750,000 ($500,000 plus a $250,000
add-on) must be provided to enable AC to attend even a modest number of
events.
Unfortunately, the amount of penalties assessed for violations of
the law have dropped to a negligible amount. In addition to increasing
the presence of inspectors, USDA must increase the penalties which are
assessed or the industry will continue to defy the law with impunity.
Lack of financial support has made it necessary for Animal Care to
rely heavily on the industry to assume responsibility for enforcement
of the law. This is the same industry that has turned a blind eye to
compliance with the law since 1970! ``Designated Qualified Persons''
(DQPs) are the ``inspectors'' from industry who are supposed to assist
AC in identifying sore horses and pursuing action against the
individuals who are responsible. The history of the DQPs reveals their
failure to achieve the level of enforcement of the unbiased, well-
trained, professional inspectors who work for AC. Following is data for
horses shown with pads on their front feet to accentuate their gait: in
calendar year 2001 (the most recent year for which such information is
available from USDA); the average rate at which DQPs identified
violations for soring was 3.4 per 1,000 horses inspected. The rate of
violations reported when government inspectors were present to oversee
the activities of the DQPs was more than 5 times higher--19 per 1,000
horses inspected.
We have few current figures on enforcement, however, we recently
learned from USDA that in 2005 of the samples taken by a gas
chromatography machine (used to test for use of illegal substances to
sore horses) at the Kentucky Celebration horse show, 100 percent
indicated the presence of diesel fuel or another similar fuel plus
numbing agents. Clearly the law is not being taken seriously by the
industry.
An appropriation of at least $750,000 is essential to permit AC to
maintain a modest level of compliance with the Horse Protection Act by
trained AC professionals.
Strengthened Enforcement of Humane Slaughter Act by FSIS
When President Eisenhower signed the Humane Slaughter Act (HSA)
into law he noted that if he went by his mail he would think Americans
were interested in no other issue. The concern about HSA enforcement
continues today and is as broad now as it was then. Over the past few
years the Congress has generously provided additional appropriations to
the Food Safety and Inspection Service (FSIS) to improve enforcement of
the Humane Slaughter Act, however, problems persist. A big part of the
problem is that the vast majority of animals currently slaughtered at
the approximately 900 federally inspected plants are not observed by
FSIS until after they are already dead.
In addition, FSIS inspectors are discouraged from enforcing the
law. Inspectors are supposed to be able to stop the slaughter line if
violations are seen. However, stopping the line will markedly reduce
the plant's financial profits, thus there is intense pressure for the
inspector not to take action. The situation at plants appears to be
cozy for people, meanwhile the animals are suffering. For example, the
Office of the Inspector General conducted an investigation of a large
plant in Iowa, issuing a report on April 25, 2005, which concluded
that: ``employees of AGRI had engaged in acts of inhumane slaughter. It
was also determined that FSIS employees observed the acts of inhumane
slaughter and did nothing to stop the practice. Additionally, the
investigation revealed that FSIS inspectors accepted meat products from
AGRI employees and that FSIS employees engaged in other acts of
misconduct.''
FSIS has attempted a variety of machinations in an effort to dupe
Congress into believing that enforcement efforts have increased
dramatically. This is mere window dressing, and inspectors who are in
the plants have confirmed that little has changed--and abuses are rife.
The situation at Agriprocessors, described above is but one example
(http://awionline.org/pubs/Quarterly/05_54_1/541p7a.htm). Because of
this, we vehemently oppose increased resources for FSIS. The agency
hasn't demonstrated its resolve to strongly enforce the law.
Bill language should direct FSIS to hire no fewer than 50
individual inspectors (as opposed to FTE's) to serve as permanent
fixtures in each of the largest slaughter plants to observe the
handling, stunning and slaughter of animals for compliance with the
law. When inspectors are not present, line speeds are increased and the
operations are conducted in a completely different (and horrific)
manner. A full-time presence is the only way to ensure compliance. FSIS
should report the results of this effort to the Committee and evaluate
the effectiveness of having full-time (not full time equivalent)
enforcement of the humane slaughter requirements following a year of
diligence. All inspectors who engage in HSA enforcement must receive
adequate training about the law and, more importantly, must receive a
strict mandate from the Secretary of Agriculture to take strong,
immediate action against any violators of the HSA. This would be a
modest step toward protecting the millions of animals who are killed
for food from unnecessary suffering.
Congress Needs to Provide Increased Oversight of Wildlife Services
Operations and Research
Wildlife Services (WS) needs to utilize a variety of tools for
management of wildlife under its purview. However, it is essential that
these tools are effective and publicly acceptable. As improved tools
are developed through research, operations must make use of this data
and shift methods accordingly.
WS needs to phase out of use of steel jaw leghold traps. WS' own
research demonstrates the archaic nature of certain leghold traps;
these should be prohibited immediately. Leghold traps slam shut with
bone-crushing force on the limbs of their victims, tearing ligaments
and tendons, severing toes and causing excruciating pain. These traps,
opposed by the vast majority of Americans, have been condemned as
``inhumane'' by the American Veterinary Medical Association, the
American Animal Hospital Association, the World Veterinary Association
and the National Animal Control Association.
The European Union (E.U.) banned use of the barbaric steel jaw
leghold trap so that 88 countries now prohibit their use. Nobly, the EU
went a step further; the EU law also prohibits import of furs from
countries that use steel jaw traps. On December 11, 1997, in response
to this European law, the U.S. Trade Representative reached an
``Understanding'' with the E.U. in which the United States agreed to
end use of ``all jaw-type leghold restraining traps'' by 2002 on
muskrat and nutria and to phase out use of ``conventional steel-jawed
leghold restraining traps'' by 2004. WS has the responsibility of
complying with this United States obligation by ending its use of these
barbaric devices.
WS should pursue no further testing of leghold traps as this would
be an extremely wasteful and cruel use of taxpayer money. Previously,
funds designated for trap research were merely passed on to a
nongovernmental organization to utilize as it saw fit, without
involvement from WS. If funds are allocated for trap testing, WS should
conduct the research since the agency has the appropriate technical
expertise.
Further, WS should adopt a policy of checking all restraining traps
within a 24-hour period. A wealth of scientific studies documents the
fact that the longer an animal is in a restraining trap, the greater
the injury. For this reason, the majority of States have a daily trap
check requirement. Animals should not be subjected to long-drawn out
pain because of a failure to assume the responsibility of carefully
checking traps every day. This policy will help reduce the trauma
experienced by non-target animals, too, ensuring that more of these
animals will be able to be released alive.
Thank you very much for the opportunity to submit testimony. We
would be happy to provide any additional information that might be of
interest.
______
Prepared Statement of the Society for Women's Health Research and
Women's Health Research Coalition
On the behalf of the Society for Women's Health Research and the
Women's Health Research Coalition, we are pleased to submit testimony
in support of increased funding for biomedical research, and more
specifically women's health research.
The Society is the only national non-profit women's health
organization whose mission is to improve the health of women through
research, education, and advocacy. Founded in 1990, the Society brought
to national attention the need for the appropriate inclusion of women
in major medical research studies and the need for more information
about conditions affecting women disproportionately, predominately, or
differently than men.
The Coalition was created by the Society in 1999 to give a voice to
scientists and researchers from across the country who are concerned
and committed to improving women's health research. The Coalition now
has more than 620 members, including leaders within the scientific
community and medical researchers from many of the country's leading
universities and medical centers, directors from various Centers of
Excellence on Women's Health.
The Society and the Coalition are committed to advancing the health
status of women through the discovery of new and useful scientific
knowledge. We believe that sustained funding for the women's health
research programs that are conducted and supported across the Federal
research agencies is necessary if we are to accommodate the health
needs of the population and advance the Nation's research capability.
Therefore, we urge your support for the Food and Drug Administration's
(FDA) Office of Women's Health and request funding of $5 million in
order that it may meet its program goals.
food and drug administration office of women's health
The Office of Women's Health (OWH) role at FDA is critical to
women's health, both within and outside the agency and to research into
sex and gender-differences, areas in which the Society long has been a
proponent. The office aims to provide scientific and policy expertise
on gender sensitive regulatory and oversight issues; to correct gender
disparities in the areas for which the FDA is responsible--drugs,
devices, and biologics and to monitor women's health priorities,
providing leadership and an integrated approach across the agency. The
OHW accomplishes its admirable work, despite inadequate budgets that
prevent it from fully accomplishing its mission.
Since its inception, OWH has funded high quality scientific
research to serve as the foundation for agency activities that improve
women's health. To date, OWH has distributed $12 million in funding for
over 100 research projects. OWH has recently funded research to fully
understand heart disease in women. Despite being the number one killer,
women with heart disease face misdiagnosis, delayed diagnosis, under-
treatment, and mistreatment due to the under-representation in heart-
related research studies. Extramural research funded by OWH is looking
into the use of coronary stents in women and problems with breast
interference in interpreting heart catherization studies.
We would encourage OWH to expand its research focus to further
address the discrepancies in heart disease treatment for women. The
Society in conjunction with WomenHeart: the National Coalition for
Women with Heart Disease compiled a list of ten questions that must be
answered if women are to receive optimal cardiovascular care and
treatment. The ten unanswered research questions are:
--Why do women receive significantly fewer referrals for advanced
diagnostic testing and treatments for heart disease than men,
and how can the referral rate for women be increased?
--What are the best tools and methods for assessing women's risk of
heart disease?
--What are the best strategies for preventing heart disease in women?
--What treatments for heart disease work best for women?
--What are the most effective methods and treatments for diastolic
heart failure, which is the most common form of congestive
heart failure in women?
--How can the heart disease diagnosis and care disparities between
white women and women of color be eliminated?
--What are the biological differences between men and women in the
location, type, and heart disease risk level associated with
fat deposits, and what determines these differences?
--How do sex differences in the regulation of heart rhythm affect
risk of heart disease and response to treatment?
--What is the role of inflammation in heart disease in women?
--Why are women ages 50 and younger more likely to die following a
heart attack than men of the same age?
As part of its educational outreach efforts to consumers, OWH
worked closely with women's advocacy and health professional
organizations to address some of the confusing issues related to the
findings of the Women's Health Initiative Study. As a result of this
OWH initiative, an informational fact sheet about menopause and
hormones and a purse-size questionnaire for women to review with their
doctor were distributed to national and local print, radio, and
Internet advertisements. The FDA website received over 3 million hits
to download campaign materials.
In 2001, the Society submitted testimony on behalf of the OWH and
in support of a centralized database at the FDA to coordinate clinical
trial oversight, monitor the inclusion of women in clinical trials,
oversee the parameters of informed consent, and identify training needs
for all scientific agency staff who analyze human clinical trials. Due
to Society efforts and this Committee's commitment, in 2002 Congress
provided the OWH at the FDA with funds to develop an agency-wide
database focused on women's health activities to include demographic
data on clinical trials. The FDA has been developing this database now
known as the ``Demographic Information and Data Repository'' to review
clinical studies, enhance product labeling, identify knowledge gaps,
and coordinate data collection.
While progress has been made, the database is far from up and
running. Currently, the FDA receives large volumes of information in
applications from drug manufacturers for review and evaluation. The FDA
reviewers must comb through the submitted drug trial reports and
digital data in as many as twelve formats in order to evaluate a new
drug's safety and effectiveness. With no uniform system or database,
reviewers must handpick gender, age, and ethnicity information from
stacks of reports and craft their own data comparisons. This is time
consuming, makes the review process less efficient, and delays access
to important information. Scientific and medical advances are occurring
rapidly and the public needs and deserves access to the most recent and
accurate information regarding their health. Therefore, in order to
fully capitalize on the potential of the data warehouse and the
resulting wealth of information, we urge Congress to commit $1 million
for the Demographic Information and Data Repository.
Scientists have long known of the anatomical differences between
men and women, but only within the past decade have they begun to
uncover significant biological and physiological differences. Sex
differences have been found everywhere from the composition of bone
matter and the experience of pain to the metabolism of certain drugs
and the rate of neurotransmitter synthesis in the brain. Sex-based
biology, the study of biological and physiological differences between
men and women, has revolutionized the way that the scientific community
views the sexes, with even more information forthcoming as a result of
the recent sequencing of the human X chromosome. The evidence is
overwhelming, and as researchers continue to find more and complex
biological differences, they are gaining a greater understanding of the
biological and physiological composition of both sexes.
The Society has long recognized that the inclusion of women in
study populations by itself was insufficient to address the inequities
in our knowledge of human biology and medicine, and that only by the
careful study of sex differences at all levels, from genes to behavior,
would science achieve the goal of optimal health care for both men and
women.
The differences between men and women are important in disease
susceptibility, prevalence, time of onset and severity and are evident
in cancer, obesity, coronary heart disease, autoimmune, mental health
disorders, and other illnesses. Physiological and hormonal fluctuations
may also play a role in the rate of drug metabolism and effectiveness
of response in females and males. This research must be both encouraged
and supported.
In addition, the Society encourages the establishment of drug-
labeling requirements that ensure labels include language about
differences experienced by women and men. Furthermore, we advocate for
research on the comparative effectiveness of drugs with specific
emphasis on data analysis by sex. When available, this information
should also be specified on drug labels.
Our country's drug development process has succeeded in providing
new and improved medications to ensure the health of both women and
men. However, there is no mandated requirement that the data acquired
during research of a new drug's safety and efficacy be analyzed as a
function of sex, to evaluate potentially important differences in
females versus males. Similarly, there are no requirements that
information regarding the action of drugs in various populations (e.g.,
women requiring a lower dosage because of different rates of absorption
or chemical breakdown) be included in prescription drug labeling or
other patient educational and instructional materials. In order for
patients to be an informed participant in their own care, they should
have access to all available pertinent information.
Proper drug labeling may not always provide the complete solution.
If the drug is not one newly approved or if sex-specific information is
detected only in post-marketing studies, the drug label will not convey
the sex-specific information discovered to the prescribing physician,
and it may be difficult to get such new information incorporated into
physicians' prescribing habits.
The Society believes the opportunity is now before us to
communicate the sex differences data discovered from clinical trials to
the medical community and to consumers through drug labeling and
packaging inserts, and other forms of alerts. As part of advancing the
analysis and reporting of sex-based effects, the Society encourages the
FDA to continue addressing the need for accurate drug labeling to
identify important sex and gender differences, as well as to ensure
that appropriate data analysis of post-market surveillance reporting
for these differences is placed in the hands of physicians and
ultimately the patient.
To ensure adequate analysis and recording of sex and gender
disparities in drugs, devices and biologics, and to provide for
appropriate regulatory policy and accurate drug labeling, we believe
that the OWH at the FDA should be funded at a total of $5 million so
that this Office can create, implement, and coordinate gender sensitive
programs vital to women and men throughout the Nation.
In conclusion, Mr. Chairman, we thank you and this Committee for
its strong record of support for women's health. We look forward to
continuing to work with you to build a healthier future for all
Americans.
______
Prepared Statement of the Society of American Foresters, National
Association of State Foresters, The Nature Conservancy, and National
Association of State Departments of Agriculture
Dear Mr. Chairman/Ranking Member: The Society of American
Foresters, National Association of State Foresters, The Nature
Conservancy, and the National Association of State Departments of
Agriculture urge the Subcommittee on Agriculture, Rural Development,
and Related Agencies to increase funding substantially for the USDA
Animal and Plant Health Inspection Service (APHIS) Emerging Plant Pests
program. A sharp increase in funding is necessary in order to ensure
adequate funding for eradication and control efforts targeting the
emerald ash borer, Asian longhorned beetle, and sudden oak death. All
three introduced organisms threaten forest and amenity trees and
related economic activities worth hundreds of billions of dollars.
This statement of common goals supplements individual letters to
the Subcommittee submitted by several of these organizations. These
individual letters address additional issues which we do not include
here.
We seek an appropriation of $55 million for fiscal year 2007 to
contain the emerald ash borer. The emerald ash borer threatens twelve
species of ash across the continent, especially in the upper Midwest
and Southeast. At risk are the $25 billion ash timber industry in the
Northeast and street trees across the Nation valued at $20 to $60
billion. The emerald ash borer outbreak is large, but the core of the
infestation remains in the lower peninsula of Michigan--where it is
largely contained by the Great Lakes. It is absolutely essential that
APHIS receive adequate funding in fiscal year 2007 to enable affected
states to eradicate the limited and isolated outbreaks found in Ohio,
Indiana, and Michigan's Upper Peninsula. It is also crucial that APHIS
and its partners carry forward detection surveys and regulatory and
educational programs aimed at preventing movement of infested firewood,
nursery stock, and other materials that spread the insect. Once the
outlying outbreaks are eradicated, officials can begin efforts to quash
the core outbreak in Michigan.
We seek an appropriation of $30 million for fiscal year 2007 to
carry forward eradication of the sole remaining populations of the
Asian longhorned beetle. The Asian longhorned beetle poses an alarming
threat to hardwood forests reaching from New England into Minnesota and
in the West, and to the hardwood timber, maple syrup, and autumn
foliage tourism industries dependent on these forests. Also at risk are
street trees across the Nation valued at $600 billion. Eradication has
been successful in Chicago, proving the efficacy of this approach.
Beetle populations in New Jersey are well on track for eradication.
Only the populations in New York persist--and that is because funding
for the New York effort has been reduced in past years to focus the
inadequate overall resources on Illinois and New Jersey. It is
essential to provide sufficient funding now and in coming years to
complete eradication in New York.
We seek $9 million in appropriations for fiscal year 2007 to
contain a third damaging forest pest, sudden oak death (also called the
phytophthora leaf and stem blight). If sudden oak death does escape
confinement, it threatens oaks in forests in Oregon and Washington as
well as throughout the Appalachians, Ozarks, and even into southern New
England. This disease is also a major threat to the Nation's nursery
industry as it readily attacks species such as rhododendron and other
species used in the garden nursery business. Spread of sudden oak death
is thus of enormous consequence to both native forests and the garden
nursery business. In its impact on the oak species, it has the
potential to devastate critical forage for many wildlife species as
well.
Additional forest pests introduced into the United States and
recently identified are currently being reviewed by scientific experts
convened by APHIS and the USDA Forest Service. The most prominent
example is the Sirex wood wasp, now present in New York, which
threatens valuable pine timber resources, including those of the
Southeast and eastern United States. The scientists' conclusions
regarding the wood wasp and other species might result in additional
funding needs.
The Society of American Foresters, National Association of State
Foresters, The Nature Conservancy, and the National Association of
State Departments of Agriculture strongly support the Congress'
numerous statements urging the Administration to release emergency
funds from the Commodity Credit Corporation sufficient to enable full
implementation of management plans for the exotic threats to our forest
resources.
Action now at the funding level requested would help ensure that
these forest pests do not reach populations so large as to threaten
forest, amenity trees, garden nursery stock, and related economic
activities worth hundreds of billions of dollars.
______
Prepared Statement the Wyoming State Engineer's Office
Dear Chairman Bennett and Ranking Member Kohl: This letter is sent
in support of the designation of 2.5 percent of the fiscal year 2007
Environmental Quality Incentive Program (EQIP) funding for the
Department of Agriculture's Colorado River Salinity Control (CRSC)
Program. Pursuant to Public Law 104-127, the USDA's CRSC Program is a
component program within EQIP. Wyoming views the inclusion of the CRSC
Program in EQIP as a direct recognition on the part of Congress of the
Federal commitment to maintenance of the water quality standards for
salinity in the Colorado River--and that the Secretary of Agriculture
has a vital role in meeting that commitment.
The State of Wyoming is a member State of the seven-State Colorado
River Basin Salinity Control Forum. Established in 1973 to coordinate
with the Federal Government on the maintenance of the basin-wide Water
Quality Standards for Salinity in the Colorado River System, the Forum
is composed of gubernatorial representatives and serves as a liaison
between the seven States and the Secretaries of the Interior and
Agriculture and the Administrator of the Environmental Protection
Agency. The Forum advises the Federal agencies on the progress of
efforts to control the salinity of the Colorado River and annually
makes funding recommendations, including the amount believed necessary
to be expended by the USDA for its on-farm CRSC Program. Overall, the
combined efforts of the Basin States, the Bureau of Reclamation and the
Department of Agriculture have resulted in one of the nation's most
successful non-point source control programs.
The Colorado River provides municipal and industrial water for 27
million people and irrigation water to nearly 4 million acres of land
in the United States. The River is also the water source for some 2.3
million people and 500,000 acres in Mexico. Limitations on users'
abilities to make the greatest use of that water supply due to the
River's high concentration of total dissolved solids (hereafter
referred to as the salinity of the water) are a major concern in both
the United States and Mexico. Salinity in the water source especially
affects agricultural, municipal, and industrial water users. While
economic detriments and damages in Mexico are unquantified, the Bureau
of Reclamation presently estimates salinity-related damages in the
United States to amount to $330 million per year. The River's high salt
content is in almost equal part due to naturally occurring geologic
features that include subsurface salt formations and discharging saline
springs; and the resultant concentrating effects of our users man's
storage, use and reuse of the waters of the River system. Over-
application of irrigation water by agriculture is a large contributor
of salt to the Colorado River as irrigation water moves below the crop
root zone, seeps through saline soils and then returns to the river
system.
In close cooperation with the EPA and pursuant to requirements of
the Clean Water Act, every three years the Forum prepares a formal
report analyzing the salinity of the Colorado River, anticipated future
salinity, and the program elements necessary to keep the salinity
concentrations (measured at Total Dissolved Solids--TDS) at or below
the levels measured in the river system in 1972 at Imperial Dam, and
below Parker and Hoover Dams. In setting water quality standards for
the Colorado River system, the salinity concentrations at these three
locations have been identified as the numeric criteria. The plan
necessary for controlling salinity and reducing downstream damages has
been captioned the ``Plan of Implementation.'' The 2005 Review of water
quality standards includes an updated Plan of Implementation. In order
to eliminate the shortfall in salinity control resulting from
inadequate Federal funding for the last several years from the USDA,
the Forum has determined that implementation of the Program needs to be
accelerated. The level of appropriation requested in this testimony is
in keeping with the agreed upon plan.
The Department of Agriculture's CRSC Program is an important proven
and cost-effective tool in improving irrigation water application and
thus reducing salt loading into the Colorado River system. For the past
22 years, the seven-State Colorado River Basin Salinity Control Forum
has actively assisted the U.S. Department of Agriculture in
implementing its unique, collaborative and important program. With the
enactment of the Federal Agriculture Improvement and Reform Act of 1996
(FAIRA), the Congress directed that the Program should be implemented
as one of the components of the Environmental Quality Incentives
Program (EQIP). Since the enactment of the Farm Security and Rural
Investment Act (FSRIA) in 2002, there is, for the first time, an
opportunity to adequately fund the Program within the EQIP. At its
recent October 2006 meeting, the Forum recommended that the USDA CRSC
Program should expend 2.5 percent of the Environmental Quality
Incentive Program funding. In the Forum's judgment, this amount of
funding is necessary to implement the needed program. ``Catch-up''
funding in the future will require expending greater sums of money,
increase the likelihood that the numeric salinity criteria are
exceeded, and create undue burdens and difficulties for one of the most
successful Federal/State cooperative non-point source pollution control
programs in the United States. The Colorado River Basin Salinity
Control Advisory Council has taken the position that the funding for
the salinity control program should not be below $20 million per year.
Over the last 3 fiscal years, for the first time, funding almost
reached the needed level. The amount of State and local cost-sharing
that can be applied in each given fiscal year is driven by the amount
of Federal appropriations and the EQIP allocation. In fiscal year 2006,
the participating basin States will cost share with about $8.3 million
and local agriculture producers will add another $7.5 million. Hence,
it is anticipated that in fiscal year 2006 the State and local
contributions will be 45 percent of the total program.
The State of Wyoming greatly appreciates the Subcommittee's support
of the Colorado River Salinity Control Program in past years. We
continue to believe this important basin-wide water quality improvement
program merits support by your Subcommittee. We request that your
Subcommittee direct the allocation of 2.5 percent of the Environmental
Quality Incentives Program funding for the USDA's CRSC Program during
fiscal year 2007. Thank you in advance for your consideration of this
statement and its inclusion in the formal record for fiscal year 2007
appropriations.
______
Prepared Statement of the U.S. Apple Association
The U.S. Apple Association (USApple) appreciates the opportunity to
provide this testimony on behalf of our nation's apple industry.
Our testimony will focus on the following areas: the Market Access
Program (MAP); funding for the Specialty Crop Competitiveness Act,
Cooperative State Research, Extension and Education Service (CSREES)
and Agricultural Research Service (ARS) funding, nutrition education
and expansion of the fruit and vegetable snack program.
USApple is the national trade association representing all segments
of the apple industry. Members include 36 State and regional apple
associations representing the 7,500 apple growers throughout the
country as well as more than 300 individual firms involved in the apple
business. Our mission is to provide the means for all segments of the
U.S. apple industry to join in appropriate collective efforts to
profitably produce and market apples and apple products.
Market Access Program (MAP)
USApple encourages Congress to appropriate $200 million in MAP
funds, the level authorized in the farm bill for fiscal 2007.
The apple industry receives over $3 million annually in export
development funds from the U.S. Department of Agriculture's (USDA)
Market Access Program (MAP). These funds are matched by grower dollars
to promote apples in more than 20 countries throughout the world. One-
quarter of U.S. fresh apple production is exported, with an annual
value of approximately $370 million.
Strong MAP funding is critical to the U.S. apple industry's efforts
to maintain and expand exports, and to increase grower profitability.
Congress recognized the importance of MAP by authorizing increased
funding in the 2002 farm bill. Over the past three years, congressional
appropriations have kept pace with the farm bill's authorized level.
Food Quality Protection Act (FQPA) Implementation
USApple urges full funding for the following U.S. Department of
Agriculture (USDA) administered programs to mitigate the negative
impact of FQPA implementation on apple growers.
--$16 million for the Pesticide Data Program, administered by the
Agricultural Marketing Service (AMS);
--$8.0 million for the National Agricultural Statistics Service
(NASS) pesticide-usage surveys;
--$2.0 million for the Office of Pest Management Policy administered
by the Agricultural Research Service (ARS);
--$3.7 million for minor-use registration of crop protection tools
(IR-4) administered by ARS;
--$7.2 million for area-wide IPM research administered by ARS;
--$13.5 million for the Integrated Pest Management Research Grant
Program administered by the Cooperative State Research,
Extension and Education Service (CSREES);
--$10.8 million for minor-use registration of crop protection tools
(IR-4) administered by CSREES; and
--$12.5 million for the Pest Management Alternatives Program,
Regional Pest Management Centers, Crops at Risk and Risk
Avoidance and Mitigation Program also administered by CSREES.
National Tree Fruit Technology Roadmap
USApple urges the Committee to support the apple industry's efforts
to improve its competitiveness by providing increased Federal funding
for the development and application of new technologies as outlined
below.
Codling Moth and Other Lepidoptera Insect Research:
--$800,000 Agricultural Research Service--Yakima, Washington
--$800,000 Agricultural Research Service--Kearneysville, West
Virginia
Colonial immigrants introduced the codling moth into the United
States from Europe, and its presence in apple orchards has plagued
apple growers for the past 200 years. If uncontrolled, codling moth
larvae damage apples by burrowing into fruits. This pest causes
significant production losses and ruins demand. Codling moth is
presently controlled by pesticide applications or techniques that
interfere with reproduction. However, these options are insufficient to
fully meet industry standards for codling moth control. Shortcomings in
current controls have even led to the closure of the apple industry's
third largest export market. Other lepidoptera insects such as oriental
fruit moth and leaf rollers are also significant pests of concern that
decrease grower profitability.
The apple industry needs better decision-making techniques,
improved understanding of secondary pests and the biology of pest
predators, improved mating disruption techniques, rapid and efficient
pest detection and instrumentation methods. Geographic differences in
codling moth control capabilities requires a regional approach to
research funding.
Rootstock Breeding and Soil Replant Disease Research:
--$400,000 Agricultural Research Service--Geneva, New York
--$400,000 Agricultural Research Service--Wenatchee, Washington
Rootstocks are important to apple growers because of their
prominence in determining tree size, tree architecture and disease
vulnerability. There is a growing interest and demand for hearty
rootstocks that lend disease resistance and improved tree structures
that are more efficient and profitable to manage.
Soil replant disease is a poorly understood phenomenon that reduces
tree vigor and stunts tree growth in new orchards, which are planted on
the site of a previously existing orchard. A combination of organisms
such as bacteria, fungi, nematodes and viruses are suspected to play a
role in attacking the roots of new apple trees, limiting their growth
potential. This problem has surfaced as a high priority problem because
of the scarcity of new orchard sites, the need to replant existing
orchards, the high per acre cost of planting new orchards and shortage
of good options to control replant disease. Soil replant disease is a
problem for all tree fruits including apples, pears, peaches and
cherries. Genetics and genomics approaches are expected to yield
significant progress in addressing rootstock related research.
Research is needed to better understand site-specific drivers
causing the disease and how the disease causes damage. Research is
necessary to develop sustainable controls.
Fruit Quality Research:
--$750,000 Agricultural Research Service--Albany, California
--$750,000 Agricultural Research Service--Wenatchee, Washington
The future of the U.S. apple industry will depend on the ability of
apple growers to consistently grow and market apples with superior
quality. Improved fruit quality will not only ensure greater
international competitiveness, but it will increase consumer demand for
apples.
Research is needed on the physical, chemical and genetic
composition of apples so apple growers can produce apples with superior
consumer traits, such as texture, aroma, and nutrition and apples with
superior production traits such as uniform ripening and better storage
characteristics and systems to deliver better fruit quality to
consumers through improved defect and quality sorting.
Automation, Sensors, and Precision Agriculture Research:
--$4,000,000 Agricultural Research Service--Kearneysville, West
Virginia
--$2,000,000 Agricultural Research Service--East Lansing, Michigan
--$2,000,000 Agricultural Research Service--Prosser, Washington
Improving labor productivity is a critically important goal for the
apple industry as it strives to remain competitive with low-wage
international competitors. Tree fruit industries must identify and
incorporate new technologies that will minimize low skill tasks,
enhance worker productivity and safety, reduce production and handling
costs, decrease seasonality of labor, and maximize fruit quality
delivered to consumers.
Additional research is needed for fruit postharvest technology
research in a packing line environment to better evaluate internal
fruit quality characteristics, such as internal defects, sugar content
and fruit firmness. Improved sensor technology used on packing lines
will be beneficial in detecting internal defects, lessen that amount of
labor needed to detect and sort fruit and ensure that all packed fruit
meets consumer demand for high quality fruit.
Successful technological innovations must be coupled with novel
plant genetics, integrated orchard designs, biorational pest and
predator management systems, and prescriptive plant bioregulators. A
systems approach will also require the simultaneous development and
deployment of remote and ground sensing capabilities for real-time
assessment of micro-environmental variables; tree vigor and orchard
canopies; pest, pathogen, and predator pressure; water stress, and
fruit quality. This research would also be applicable to a host of tree
fruits including cherries, peaches, almonds and apples and pears.
The need for investment in these new technologies has never been
greater, but current Federal research to address this need is
insufficient. Therefore, the tree fruit industry is requesting an
increase in research funding to meet this great need.
Specialty Crops Competitiveness Act
USApple urges Congress to fund the block grants authorized under
the Specialty Crop Competitiveness Act at the full $44.5 million
authorized under the Act.
The Specialty Crop Competitiveness Act (SCCA) was introduced in the
108th Congress by Reps. Cal Dooley (D-CA) and Doug Ose (R-CA) and in
the Senate by Senators Craig (R-ID) and Stabenow (D-MI). The bill was
designed to strengthen demand, reduce production costs, and enhance
production and marketing efficiencies.
The majority of the funds authorized funds would go toward block
grants, with each State department of agriculture being guaranteed a
minimum of $100,000. In fiscal year 2006 Congress appropriated $7
million for the block grants. USDA's Agriculture Marketing Service is
now in the process of drafting regulations to implement the program.
There is a strong need to build on the $7 million authorized for fiscal
year 2006 and continue this important program.
USApple urges Congress to increase funding for the Technical
Assistance for Specialty Crops (TASC) program to $4 million as
authorized under the Specialty Crop Competitiveness Act.
This program has been critical over the last 4 years in helping the
apple industry address specific sanitary and phytosanitary (SPS) non-
tariff trade barriers.
Fresh Fruit and Vegetable Snack Program
USApple urges Congress to include $36 million in the USDA budget to
expand the fruit and vegetable snack program to 25 schools in each of
the 36 remaining States.
The 2002 farm bill established the Fruit and Vegetable Pilot
Program to promote consumption of fruits and vegetables among school
children by providing free produce to schools in 25 schools in each of
four States (Iowa, Indiana, Michigan, Ohio and one Indian Tribal
Organization in New Mexico). The Child Nutrition and WIC
Reauthorization Act of 2004 made the pilot permanent and expanded it to
25 schools in Mississippi, three additional States (North Carolina,
Pennsylvania and Washington were chosen by USDA) and two additional
Indian Reservations. In fiscal year 2006, Congress expanded the program
to an additional 6 States (Utah, Wisconsin, Texas, Idaho, New Mexico,
and Connecticut). If Congress is unable to expand the program to the
entire country, USApple urges that the program be expanded to include
New York.
Reports from the original pilot showed that students were
increasing their consumption of fruits and vegetables, choosing more
fruits and vegetables for lunch, and asking their parents for fruits
and vegetables at home. The fruit and vegetable snack program works to
educate children about the healthy eating habits that will last a
lifetime. The fruit and vegetable snack program should be expanded to
25 schools in every State.
REINSTATEMENT OF RECESSIONS
Temperate Fruit Fly Research Position--Yakima, Wash.
USApple requests continued funding of $300,000 to conduct critical
research at the USDA ARS laboratory in Yakima, Wash. on temperate fruit
flies, a major pest of apples.
The Yakima, Wash., USDA ARS facility is conducting research
critical to the crop protection needs of the apple industry. FQPA
implementation has reduced the number of pesticides currently available
to growers for the control of pests, such as cherry fruit fly and apple
maggot. Left unchecked, these temperate fruit flies can be devastating.
Thus, research is needed to develop alternative crop protection methods
as growers struggle to cope with the loss of existing tools. While
Congress appropriated $300,000 last fiscal year for this critical
research, the administration's proposed budget for fiscal 2007 rescinds
this funding.
Post Harvest Quality Research Position--East Lansing, Mich.
USApple urges Congress to maintain funding of $309,600 in the USDA
ARS fiscal year 2007 budget for the postharvest quality research
position in East Lansing, Mich.
The East Lansing, Mich., USDA ARS facility is conducting research
critical to the future survival of the apple industry. Using a series
of new sensing technologies, researchers at this facility are
developing techniques that would allow apple packers to measure the
sugar content and firmness of each apple before it is offered to
consumers. Research indicates consumer purchases will increase when
products consistently meet their expectations, suggesting consumers
will eat more apples once this technology is fully developed and
employed by our industry. While Congress appropriated $309,600 last
fiscal year for this critical research, the administration's proposed
budget for fiscal 2007 rescinds this funding.
Genomics, Disease Resistance and Insect Behavior--Kearneysville, W.V.
USApple urges Congress to maintain funding of $588,900 in the USDA
ARS 2007 budget for genomics, disease resistance and insect behavior
research in Kearneysville, W.V.
This research provides critical information that assists with the
development of new apple varieties, identification of disease pathways
and strategies to control devastating insect pests. This research is
important in developing solutions to problems that reduce fruit quality
and increase production costs. Apple growers depend on this research
for economic sustainability and increased international
competitiveness.
Genetics of Fruit Quality Research--Wenatchee, Wash.
The Wenatchee, Wash., USDA Agricultural Research (ARS) lab is
building a genetics and genomics research program that will develop a
greater understanding of fruit quality attributes that are important to
consumers, such as flavor, texture, storability and nutrition. This
research will also provide a clearer understanding of where important
genes are located within the apple genome and the role those genes play
in the expression of desirable fruit quality attributes. This
understanding will provide new tools that can be understood as a
multiplier effect to propel existing research programs that will be
able to utilize the genetics and genomics tools related to fruit
quality and physiological issues.
USApple urges Congress to maintain baseline funding of $450,000 in
the USDA Agricultural Research Service's fiscal year 2007 budget for
the genetics of fruit quality research position in Wenatchee, Wash.
Laboratory.
______
Prepared Statement of the USA Rice Federation
Dear Mr. Chairmen: This is to convey the rice industry's request
for fiscal year 2007 funding for selected programs under the
jurisdiction of your respective subcommittees. The USA Rice Federation
appreciates your assistance in making this letter a part of the hearing
record.
The USA Rice Federation is the national advocate for all segments
of the rice industry, conducting activities to influence government
programs, developing and initiating programs to increase worldwide
demand for U.S. rice, and providing other services to increase
profitability for all industry segments. USA Rice members are active in
all major rice-producing States: Arkansas, California, Florida,
Louisiana, Mississippi, Missouri, and Texas. The USA Rice Producers'
Group, the USA Rice Council, the USA Rice Millers' Association, and the
USA Rice Merchants' Association are members of the USA Rice Federation.
USA Rice understands the budget constraints the committee faces
when developing the fiscal year 2007 appropriations bill. We appreciate
your past support for initiatives that are critical to the rice
industry and look forward to working with you to meet the continued
needs of research, food aid and market development in the future.
A healthy U.S. rice industry is also dependent on the program
benefits offered by the Farm Security and Rural Investment Act of 2002.
Therefore, we oppose any attempts to modify the support levels provided
by this vital legislation through more restrictive payment limitations
or other means and encourage the committee to resist such efforts
during the appropriations process.
A list of the programs the USA Rice Federation supports for
appropriations in fiscal year 2007 are as follows:
Funding Priorities
Research and APHIS
The Dale Bumpers National Rice Research Center should receive
continued funding at the fiscal year 2006 approved level. This center
conducts research to help keep the U.S. rice industry competitive in
the global marketplace by assuring high yields, superior grain quality,
pest resistance, and stress tolerance. The fiscal year 2007 budget
proposal from the U.S. Department of Agriculture proposes to rescind
$270,000 in funding for this key research center, which would severely
hamper the vital research activities being conducted at this national
center. We urge you to provide full funding to the Dale Bumpers
National Rice Research Center.
In addition, we have attached information outlining the top
priority research request from the USA Rice Federation; funding for
aromatic rice variety research at the Dale Bumpers Center. The request
is for $250,000 for fiscal year 2007 for research to develop domestic,
high-yielding, high-quality aromatic rice varieties for the U.S. rice
industry. Further details and specifics of this request are attached.
Furthermore, we urge the subcommittee to continue to provide full
funding for the USDA-ARS Rice Research Unit in Beaumont, Texas. The
fiscal year 2007 budget proposal calls for cuts of $1.4 million, which
would likely result in the closure of this important rice research
facility. We ask for your consideration in maintaining funds to keep
this center in operation for the benefit of the U.S. rice industry.
The Western Regional Research Center, located in California, should
receive continued full funding for operating funds. This center
provides important research activities in support of the California
rice industry, particularly post-harvest research. This facility has
undergone recent modernization and upgrades and it is important to
continue to provide the funds necessary to allow the center to continue
full operations.
For APHIS-Wildlife Services, we encourage the committee to fund the
Louisiana blackbird control project at $333,000. This program annually
saves rice farmers in Southwest Louisiana over $4,000 per farm, or $2.9
million total. No increases have been provided to the program since
1994 and inflation is reducing the overall impact. An increase from the
$150,000 baseline is justified.
Market Access
Exports are critical to the U.S. rice industry. Historically, 40-50
percent of annual U.S. rice production has been shipped overseas. Thus,
building healthy export demand for U.S. rice is a high priority.
The Foreign Market Development Program (FMD) allows USA Rice to
focus on importer, foodservice, and other non-retail promotion
activities around the world. For fiscal year 2007, FMD should be fully
funded at $34.5 million, consistent with the President's Budget
request.
The Market Access Program (MAP) allows USA Rice to concentrate on
consumer promotion and other activities for market expansion around the
world. For fiscal year 2007, MAP should be funded at $200 million as
authorized by the Farm Security and Rural Investment Act of 2002, which
restores MAP funding to its authorized level. This is $100 million
above the President's budget request.
In addition, the Foreign Agricultural Service should be funded to
the fullest degree possible to ensure adequate support for trade policy
initiatives and oversight of export programs. These programs are
critical for the economic health of the U.S. rice industry.
Food Aid
We encourage the committee to fund Public Law 480 Title I at a
minimum level of $100 million, an increase from fiscal year 2006
levels. This program is our top food-aid priority and we support
continued funding in order to meet international demand. Food-aid sales
historically account for a significant portion of U.S. rice exports.
For Public Law 480 Title II we support funding for fiscal year 2007
at $1.335 billion, equal to the fiscal year 2006 level. We encourage
the committee to fund Title II at a level to ensure consistent tonnage
amounts for the rice industry. We oppose any shifting of funds, as all
Title II funds have traditionally been contained within USDA's budget.
We believe all food-aid funds should continue to be used for food-aid
purchases of rice and other commodities from only U.S. origin.
USA Rice supports continued funding at fiscal year 2006 levels for
Food for Progress. Funding for this program is important to improve
food security for food deficit nations.
The Global Food for Education Initiative is a proven success and it
is important to provide steady, reliable funding for multi-year
programming. USA Rice supports the $103 million request in the
President's fiscal year 2007 budget for this education initiative
because it efficiently delivers food to its targeted group, children,
while also encouraging education, a primary stepping-stone for
populations to improve economic conditions.
Other
Farm Service Agency.--We encourage the Committee to provide
adequate funding so the agency can deliver essential programs and
services. The Agency has been hard hit by staff reductions and our
members fear a reduction in service if sufficient funds are not
allocated.
Please feel free to contact us if you would like further
information about the programs we have listed. Additional background
information is available for all of the programs we have referenced,
however, we understand the volume of requests the committee receives
and have restricted our comments accordingly.
Thank you for your consideration of our recommendations.
Attachment:
FISCAL YEAR 2007 FUNDING REQUEST FORM
Agency.--U.S. Department of Agriculture
Account.--USDA/ARS: The Dale Bumpers National Rice Research Center,
Stuttgart, AR
Project Name.--Research to develop domestic, high yield, high
quality aromatic rice varieties at the USDA/ARS Dale Bumpers National
Rice Research Center
Priority.--High.
New Project.--Yes.
Project Description.--Aromatic rice imports have grown dramatically
in the United States in the past 15 years and now total about 450,000
MT per year or 15 percent of total consumption. The United States does
not have an aromatic rice variety that has the yield, milling quality,
and flavor to compete with the imported products. The research will
enable the U.S. rice industry to compete effectively in a timely manner
in the U.S. market with imported aromatic rice.
The Dale Bumpers National Rice Research Center conducts research in
rice genetics, quality, and pests' resistance to help keep the U.S.
rice industry competitive in the global marketplace. The Center
directly serves the needs of the U.S. industry in Arkansas, California,
Mississippi, Louisiana, Missouri, and Texas. One of its major emphases
is the genetic improvement of rice through the use of cutting-edge
genomic tools and a multidisciplinary research approach.
Aromatic rice has a flavor and aroma similar to roasted nuts or
popcorn. This is a natural compound that is found in several plants
like corn and rice but is present in much higher concentrations as a
result of breeding and development of aromatic rice varieties.
What is the anticipated benefit and/or impact of the project?
Developing high-yielding domestic aromatic rice varieties with the
grain quality traits needed is essential for the U.S. rice industry to
compete in this market and meet domestic consumer demand. In addition,
developing a new understanding of the various chemical compounds that
result in aromatic flavors and smells, along with developing genetic
markers that can be used by breeders to improve grain chemistry and
grain appearance traits, will help the U.S. rice industry to have a
competitive edge in this value-added market.
Previous Funding: Fiscal Year 2002-06 And Amount.--Zero.
Fiscal Year 2007 Request.--$250,000; one full-time staff position
for 1 year.
Fiscal Year 2007 Share.--Fiscal year 2007 funding is for 1 year of
research, with development of a multi-year project pending the findings
of the 2007 research.
Local Share.--Availability of matching funds is being explored at
this time.
Request Description
ARS Account: Dale Bumpers National Rice Research Center, Stuttgart,
AR
Dale Bumpers National Rice Research Center, Stuttgart, AR
Domestic Aromatic Rice Varieties Research
The Committee provides $250,000 toward development of domestic
aromatic rice varieties to enable the U.S. rice industry to compete
effectively in a timely manner in the U.S. market.
______
Prepared Statement of the University of Southern Mississippi and the
Mississippi Polymer Institute
Mr. Chairman, distinguished Members of the Subcommittee, I thank
you for this opportunity to provide testimony describing ongoing
research and commercializing efforts of The University of Southern
Mississippi (USM) and the Mississippi Polymer Institute. I am very
grateful to the Subcommittee for its leadership and the continued
support of the Institute and its work. This testimony will include a
summary of the Institute's research progress since my testimony of
approximately 1 year ago.
Research efforts over the last year have focused on developing
agricultural-based, environmentally responsible derivatives for use in
coatings and composites to replace petroleum derivatives. Novel
monomers for emulsion polymerization have eliminated the previously
required complicated synthesis procedures while allowing higher levels
of vegetable oil macromonomer (VOMM) incorporation. The resulting latex
polymers facilitate the formulation of architectural coatings with
gloss levels rivaling solvent-based coatings and zero volatile organic
compound (VOC) content. Performance and storage stability optimization
continues across a wide range of novel VOMMs. We are excited about the
continued progress as we believe the agriculturally-derived monomers
have the potential to improve performance while reducing environmental
hazards.
Last year, we reported the successful production of lab-scale soy-
based adhesive, formaldehyde-free particleboards that exceeded all
commercial specifications. We have confirmed that the adhesive can be
scaled up to 30 L batches that produce superior boards compared to the
conventional formaldehyde-based boards. Moreover, the soy-based
particleboards degrade faster than commercial particleboards as
evidenced in soil burial tests. To the best of our knowledge, this is
the only soy protein-based adhesive that can be formulated into
particleboards without the use of formaldehyde-releasing resins that
meets and exceeds commercial particleboard performance. Pilot plant
testing confirmed laboratory performance. It defined the limits of
conventional production and suggested areas requiring further research
to prepare it for commercial manufacturing.
Through our continued research, the U.S. farmer is better
positioned to grow and supply the sustainable raw materials required to
produce environmentally responsible products and reduce our dependency
on imported petroleum products. Coupled with the reduction in air
pollution, a carbon neutral technology, and the absence of
formaldehyde, our research is a valuable strategic component to
America's long-term success and aid in maintaining a higher standard of
living. To date, our technology has resulted in a total of 25 patents
and patent applications, both United States and foreign. Additional
patent applications will be submitted during the upcoming months. With
adequate funding, facilities, and commitment, ag-based research will
continue to the betterment of our society. We are most appreciative of
your support and will continue to push for full commercialization of
technological advances utilizing agricultural intermediates while
training scientists for careers in the next generation of
agriculturally-oriented polymer science.
The design and synthesis of novel vegetable oil macromonomers
(VOMMs) using soy oil, linseed oil, and tung oil are being
investigated. Continued research has increased the utility for new
monomers at higher levels of incorporation. Tailored synthesis methods
with the new monomers have increased the VOMM content in latexes to 80
percent of the monomers by weight, a 30 percent increase over last year
(based on solids). The monomers that permit the polymer chain to form a
smooth film also provide a mechanism for crosslinking through auto-
oxidation. Successful incorporation of a variety of VOMM levels allows
our research to advance to the optimization of unsaturation, comonomer
ratios, and coating performance. Long-term storage stability and
coatings performance continue to be investigated.
Surfmers or VOMMs that act as the stabilizing surfactant and a
participating monomer in emulsions continue to be investigated.
Neutralized soybean acrylated monomer (nSAM) functions well as a
surfmer and performs similar to commercial surfactants with good
polymerizability. Last year, we synthesized stable styrene emulsion
copolymers containing 44 weight percent VOMM-based surfmers. This year,
we have successfully synthesized 100 percent VOMM-based latexes that
yielded high gloss films without added plasticizers or solvents,
forming films at 0C.
Solvent-free nail polishes and waterborne industrial coatings based
on VOMMs were studied in comparison with commercial products. VOMM-
based nail polishes provided high gloss levels and improved adhesion on
plastic (ABS) and human nails. Research will continue to improve the
water resistance. Industrial coatings formulated with VOMM-based
latexes performed similar or superior to the control coatings when
crosslinked with melamine or aziridine crosslinkers, respectively.
VOMM-based latexes formulated into paper coatings have exhibited
performance properties similar to those of styrene-acrylic commercial
controls. VOMM coating properties continue to be evaluated and
optimized using various comonomer compositions.
Particleboard composites based solely upon soy protein adhesives
were scaled from the 1-4 L range to 30 L and proved that board
performance and storage stability are achievable. Additionally, the 30
L batch of adhesive produced quality composites after long-term
storage. Our research produced particleboards that have met or exceeded
each of the industry performance requirements as defined by ANSI
standards for M1, M2, M3, and M-S grade boards. The two primary
barriers to market entry/commercialization are solids content/viscosity
and cost. This year, the practical adhesive solids content was
increased from 20 weight percent to 29 weight percent. Commercial
formaldehyde-based resins are supplied at 65 percent or greater in
solids content. The low solids content of our adhesive necessitates
removal of large quantities of water during the commercial
manufacturing process which is influenced by various factors such as
temperature, time, and platen type and size. Current research efforts
are focused on improving the solids content/viscosity balance through
understanding the protein interactions in water that generate a viscous
solution. Soy protein isolate (SPI) is a high purity protein (90
percent) and therefore is more expensive than other forms of soy
protein such as defatted soy flour (DSF) at 53 percent protein content.
Particleboards manufactured with DSF as the sole replacement for SPI
exceeded MS and M1 specifications, but did not meet M2 and M3
performance requirements. Since SPI-based particleboards exceed the
commercial performance requirements of formaldehyde-based
particleboards in that it delivers superior moisture resistance and
improved structural integrity even after 24 hours of water immersion,
we believe the environmentally responsible and sustainable goals
warrant further research. In addition to the performance attributes,
SPI-based particleboards degrade more rapidly than commercial
particleboards during soil burial tests.
The Mississippi Polymer Institute is charged with promoting and
supporting Mississippi's polymer industry by providing workforce
development, technical service, product development, and assistance
with economic development activities. In the area of workforce
development, the Institute provides industry training in injection
molding, extrusion, blow molding, and lean manufacturing. In 2004-2005,
MPI trained 192 employees and in 2005-2006 MPI provided training for an
additional 152 employees. The Institute has implemented polymer
technology programs in high schools throughout the State of
Mississippi. Currently, MPI supports four high school polymer
technology programs in Petal, Moss Point, Columbia, and Corinth. There
are 74 students enrolled in these programs. Implementing similar
programs throughout the State will build a skilled workforce in polymer
science for Mississippi.
The faculty, the University, and the State of Mississippi are
strongly supportive of the Mississippi Polymer Institute and its close
ties with industry. Most faculty maintain at least one industrial
contract as an important part of extramural research efforts. Polymers
which include fibers, plastics, composites, coatings, adhesives, inks,
and elastomers play a key role in the materials industry. They are
ubiquitous in industrialized societies and across all industries
including textiles, aerospace, transportation, energy, packaging,
architecture and construction, medicine, sports and sporting goods,
composites, and defense related materials. Critical for many of the
technologies is a combination of controlled performance, weight
reduction, and high strength performance. Unfortunately, our strategic
position resembles the natural rubber supply situation during WWII
which was controlled by potentially unreliable sources affecting our
Nation's security.
Our agriculturally focused research continues to create innovative
natural product derivatives across several technology platforms
targeting commercialization in coatings, adhesives, composites, and
polymers in general. America is presently at a critical point in
history as our standard of living is tied directly to technological
advancements and innovation demanding high energy usage and the need
for scientists and engineers. Since petroleum reserves are being
depleted at an accelerating rate and other countries are competing on
price and innovation, timing is critical. Our youth are no longer
choosing careers in science and engineering which will cause us to lose
our competitive edge, and in turn, affect the standard of living within
the next decade. Our greatest achievements can be accomplished through
the development of high performance materials based upon carbon neutral
sustainable raw material resources. Almost every technological
development over the past decade was dependent upon polymeric
materials. Since the polymer industry is the largest single consumer of
petroleum chemical intermediates in the world, our reality is clear in
that we must develop agriculture as the industry of the future.
Fortunately, many scientists are beginning to harness agricultural
feedstocks and natural products. For example, a scientific literature
search using the term biomimetic (defined as copying nature's methods
or designs) revealed only 125 peer reviewed publications and patents in
1990, whereas over 1,100 publications and patents in 2005, followed
nature's lead for energy-related products, coatings protection,
composites, adhesives, environmentally friendly antibacterial/
antimicrobial agents, and improved medicines. A similar search using
the word polymer provides over 70,000 publications and patents for
2005. Our research and commercialization efforts encompass many
important facets including training scientists that will continue to
innovate and develop technology that is critical for the maintenance of
our quality of life and national stability. We, as a Nation, can
improve our environment, reduce our dependence on imported petroleum,
keep America's farmlands in production, and continue to be the World's
technology leader. Your support is necessary to continue our research
efforts to accomplish the goals set forth.
As a polymer scientist, I am intrigued by the vast opportunities
offered by American agriculture. As a professor, however, I continue to
be disappointed that few of our science and business students receive
training in the polymer-agricultural discipline despite its enormous
potential. The School of Polymers and High Performance Materials and
the Mississippi Polymer Institute at USM are attempting to make a
difference by showing others what can be accomplished if appropriate
time, energy, and resources are devoted to the understanding of ag-
based products. I became involved in the polymer field more than 40
years ago, and have watched its evolution where almost each new product
offered the opportunity for many more. Although polymer science as a
discipline has experienced expansion and a degree of public acceptance,
alternative agricultural materials in the polymer industry continue to
be an underutilized national treasure. Today, society displays less
acceptance of petroleum-derived materials than ever before, and
consequently, the timing is ideal for agricultural materials to make
significant inroads as environmentally responsible, biodegradable, and
renewable feedstocks. Agricultural materials have always been available
for our use, and the scientific community often grasps the real
potential for renewable materials, unfortunately, society continues to
ignore their potential.
U.S. agriculture has made the transition from the fields to the
kitchen tables, but America's industrial community continues to be
frightfully slow in adopting ag-based industrial materials. The prior
sentence was included in several of my previous testimonies and rings
true again. We are making progress and must continue to aggressively
pursue these opportunities and in doing so:
--Intensify U.S. efforts to commercialize alternative crops and
dramatically reduce atmospheric VOC emissions and odor. The
result will be much cleaner and less noxious air for all
Americans.
-- Reduce U.S. reliance on imported petroleum.
-- Maintain a healthy and prosperous farm economy with unlimited
sustainability.
-- Foster new cooperative opportunities between American farmers and
American industry.
--Create advanced polymer technology-based manufacturing jobs that
can not be easily exported to other countries.
Mr. Chairman, your leadership and support are deeply appreciated by
the entire USM community. While I can greatly appreciate the financial
restraints facing your Subcommittee, I feel confident that further
support of the Mississippi Polymer Institute will continue to pay
dividends of increasing commercialization opportunities of agricultural
materials in the American industry and training scientists required for
America's continued prosperity. Advances in polymer research are
crucial to food, energy, transportation, housing, medical, and defense
industries. Our work has clearly established the value of ag-products
as industrial raw materials, and we must move it from the laboratories
to the industrial manufacturing sector. Only then can the United States
enjoy the cleaner and safer environment that these technologies offer,
as well as new jobs, and expanded opportunities for the U.S. farmer and
scientists. We are most grateful for the support you have provided in
the past. The funding you have provided has supported fundamental
research as well as pilot commercial manufacturing and testing.
However, additional funds are needed to further advance these
technologies.
Since our testimony last year, we have continued to research,
understand, and develop, agricultural-based materials for
commercialization. We are in need of additional and consistent
resources to advance these infant technologies to the market place, and
to continue our research and development of other exciting
technologies. We therefore respectfully request $2 million in federal
funding to more fully exploit the potential of commercializing the
technologies described herein. We have shown that we can be successful,
yet we need additional resources in order to ultimately utilize the
potential of this technology. Next year's research and
commercialization plan is aggressive, knowing that our Nation requires
technology to survive and that our efforts will be recognized as
instrumental in developing a ``process'' for the commercialization of
new ag-based products. The development of this process, and to show it
is successful, is extremely important to all entrepreneurs who believe
in and support ag-based products. Thank you, Mr. Chairman and Members
of the Subcommittee, for your support and consideration.
______
Prepared Statement of the Upper Mississippi River Basin Association
The Upper Mississippi River Basin Association (UMRBA) is the
organization created in 1981 by the Governors of Illinois, Iowa,
Minnesota, Missouri, and Wisconsin to serve as a forum for coordinating
the five States' river-related programs and policies and for
collaborating with Federal agencies on regional water resource issues.
As such, the UMRBA has an interest in the budget for the U.S.
Department of Agriculture's conservation programs and technical
assistance.
Of particular importance to the UMRBA is funding for the
Conservation Reserve Program (CRP), Wetlands Reserve Program (WRP),
Environmental Quality Incentives Program (EQIP), and Conservation
Security Program (CSP). Taken together, these four Commodity Credit
Corporation-funded programs provide an invaluable means for the USDA to
work with landowners, local conservation districts, and the states to
maintain agricultural productivity while protecting the Nation's soil
and water resources. Moreover, they do this in a voluntary, non-
regulatory fashion. CRP, WRP, EQIP, and CSP will be key non-regulatory
elements in the States' efforts to address agricultural sources of
water quality impairment through the Total Maximum Daily Load program.
Successful application of conservation programs to this region's water
quality problems will also help address the growing national concern
with hypoxia in the Gulf of Mexico, which has been linked to nutrient
loads from agriculture and other sources. As stewards of some of the
Nation's most productive agricultural lands and important water
resources, the five States of the Upper Mississippi River Basin believe
these programs are vital.
Conservation Reserve Program
The UMRBA supports President Bush's fiscal year 2007 budget request
of $2.09 billion for the Conservation Reserve Program, a 5 percent
increase over fiscal year 2006. This increase is testament to the
strong landowner interest and high environmental benefits resulting
from enrollment of fragile cropland acres in CRP. Through CRP, farmers
and ranchers can voluntarily establish long term conservation
practices, such as filter strips and riparian buffers, on highly
erodible and environmentally sensitive cropland.
In the UMRBA States (Illinois, Iowa, Minnesota, Missouri, and
Wisconsin), total CRP enrollment is currently 7.0 million acres, or
approximately 19 percent of the national CRP acreage. Yet the five
States' CRP enrollment represents 41 percent of the total number of CRP
contracts, 40 percent of the total number of farms enrolled nationwide
in the CRP, and 32 percent of the total annual CRP rental payments.
In 2007, nearly 39,000 CRP contracts in the five UMRBA States will
expire, representing 29 percent of the CRP acres currently enrolled in
these States. To determine which expiring contracts will be eligible
for re-enrollment, USDA used an Environmental Benefits Index. As a
result, 99.7 percent of the contracts expiring in 2007 in the five
States will be offered re-enrollment.
All five UMRBA States also have active Conservation Reserve
Enhancement Programs tailored to meet their priority conservation
needs. Current CREP enrollment in the five States is nearly 243,000
acres, or 31 percent of the national total. These rates of
participation clearly demonstrate the importance of the CRP and CREP in
the Nation's agricultural heartland and reflect the compatibility of
these programs with agricultural productivity.
Wetlands Reserve Program
The President's fiscal year 2007 budget proposes $403 million for
the Wetlands Reserve Program, an increase of 60 percent over fiscal
year 2006 funding. UMRBA applauds this substantial increase and urges
Congress to provide sufficient funding to meet WRP's 2007 enrollment
goal of 250,000 acres, which is 100,000 acres more than the 2006
estimate.
Since the WRP was established in 1996, its easements have proven to
be important tools for restoring and protecting wetlands in
agricultural areas. This is clearly evident from the overwhelming
landowner response and the resulting improvements to water quality and
habitat. Through fiscal year 2004, WRP enrollment in Illinois, Iowa,
Minnesota, Missouri, and Wisconsin totaled more than 309,000 acres, or
19 percent of the national total. In fiscal year 2005, landowners in
the five States enrolled an additional 28,000 acres in the WRP.
However, there were 1,217 eligible, but unfunded, applications to
enroll another 134,000 acres from the five States in fiscal year 2005.
This represents 38 percent of the total national backlog of
applications for that year.
Environmental Quality Incentives Program
In contrast to conservation programs that protect land and water
resources by curtailing production on sensitive lands, the
Environmental Quality Incentives Program supports conservation on
working lands. Promoting agricultural production and environmental
quality as compatible goals is particularly important in the Midwest
agricultural heartland.
The 2002 Farm Bill provides $1.3 billion of budget authority for
the EQIP in fiscal year 2007. However, the President is proposing to
fund EQIP at only $1.0 billion. The UMRBA urges Congress to fund EQIP
at its full authorized level. Like many other conservation programs,
EQIP funding has not kept pace with demand. Even at full funding, there
will likely be significant numbers of unfunded EQIP applications. In
fiscal year 2006, the EQIP allocation to the States of Illinois, Iowa,
Minnesota, Missouri, and Wisconsin totals $118 million, only slightly
more than the $114 million provided in fiscal year 2004, a year when
there was an additional $180 million in unmet requests for EQIP
assistance.
Conservation Security Program
The President's fiscal year 2007 budget request of $342 million for
the Conservation Security Program reflects a 32 percent increase over
fiscal year 2006 for this popular voluntary program, which provides
financial and technical assistance to agricultural producers who
implement conservation measures on working lands.
In fiscal year 2005, CSP contracts were offered to farmers and
ranchers in 220 watersheds across the country. Twenty-two of those
watersheds were in the five States of the Upper Mississippi River
Basin. In those 22 watersheds, NRCS approved payments totaling $37.6
million, which was 26 percent of the total CSP contract payments that
year.
In fiscal year 2006, CSP will be offered in 60 different watersheds
nationwide, including one or two in each UMRBA State. It is too early
to judge the demand for CSP in fiscal year 2006. The fiscal year 2006
sign-up opened February 13, 2006 and is scheduled to close March 31,
2006. It remains to be seen what the ultimate level of landowner
interest will be in the CSP, as eligible watersheds change each year.
But the UMRBA is encouraged that CSP is continuing to expand and
funding levels are increasing.
Conservation Technical Assistance
Through the Conservation Technical Assistance program, NRCS
provides the technical capability that helps people plan and apply
conservation on the land. NRCS works through and in partnership with
conservation districts to assist individuals and groups in assessing
conservation needs and planning, designing, and installing conservation
practices. In addition, the CTA program assists in preparing landowners
to participate in USDA conservation financial assistance and easement
programs, provides emergency disaster technical assistance, and enables
NRCS to coordinate with other programs such as U.S. EPA's nonpoint
source management program and U.S. Fish and Wildlife Service's Partners
for Wildlife. Approximately $92.8 million in CTA funding will be
allocated to the five UMRBA States (Illinois, Iowa, Minnesota,
Missouri, and Wisconsin) in fiscal year 2006. Yet that is an 8.6
percent decrease from funding levels just 2 years ago.
Given that CTA is the foundation for much of the Nation's private
lands conservation assistance, it is disappointing that the President's
fiscal year 2007 budget proposes a $62 million, or 9 percent, decrease
in the CTA account. The UMRBA urges that, at a minimum, funding for CTA
be maintained at the fiscal year 2006 level.
Watershed Programs
The UMRBA is concerned that the President is proposing deep cuts to
NRCS's watershed programs, including total elimination of the Watershed
and Flood Prevention Operations program, which funds Public Law 566 and
Public Law 534 projects. Funding for Watershed Operations has declined
substantially over the past 20 years, from an historical high of $199
million in fiscal year 1994 to only $74 million in fiscal year 2006.
And yet this program provides significant local, regional, and national
benefits, by addressing watershed protection, flood prevention, erosion
and sediment control, water supply, water quality, water conservation,
agricultural drought problems, rural development, municipal and
industrial water needs, upstream flood damages, fish and wildlife
habitat enhancement, and wetland creation and restoration. In May 2005
there were $1.89 billion of unfunded Federal commitments to Public Law
566 and Public Law 534 projects nationwide, with nearly $243 million of
that in the States of Illinois, Iowa, Minnesota, and Missouri. Despite
the fact that Public Law 566 and Public Law 534 projects in the five
States were allocated nearly 27 percent of the total national funding
in fiscal year 2005, that amount ($19.1 million) was far less than the
$243 million backlog. In fiscal year 2006, although there is only $74
million available for watershed protection and flood prevention
operations nationwide, there are funding requests totaling over $174
million, $44 million of which are in the five UMRBA States. Rather than
eliminating this important program, UMRBA urges that it be funded at
least equal to the fiscal year 2006 level of $74 million.
In addition to continuing to invest in watershed and flood
prevention projects, the rehabilitation of aging flood control dams
must also be addressed. Of the 11,000 Public Law 534 and Public Law 566
dams nationwide, more than 3,000 will reach the end of their design
life by 2013. Recognizing this fact, Congress authorized the Watershed
Rehabilitation Program in 2000 and authorized significant new funding
for the program in the 2002 Farm Bill. In particular, $60 million is
authorized for the Watershed Rehabilitation Program in fiscal year
2007. Yet the President's fiscal year 2007 budget request is only $15
million, a 52 percent decrease over the fiscal year 2006 funding level.
In fiscal year 2005, when $27.3 million was appropriated for the
Watershed Rehabilitation Program, only 60 percent of the $46 million in
project requests was met for the year. Rehabilitation of aging dams,
which could become a threat to public health and safety, is extremely
important and UMRBA thus urges Congress to fund the Watershed
Rehabilitation Program at least equal to its fiscal year 2006 level.
______
Prepared Statement of West Virginia University
Chairman Bennett and Members of the Subcommittee: Thank you for the
opportunity to offer testimony to the Subcommittee on Agriculture,
Rural Development, and Related Agencies. We request funding in the
amount of $1,000,000 in the USDA budget for fiscal year 2007 to
initiate a program called SCIPS, the Small Community Infrastructure
Protection and Sustainability program. Discussion regarding our request
is offered below.
Introduction
My name is Richard Bajura, and I serve as Director of the National
Research Center for Coal and Energy at West Virginia University in
Morgantown, West Virginia. We have a long history of working with small
and rural communities on projects in drinking water, wastewater, solid
waste management, security for small community water systems, and
emergency preparedness. We offer a resource of information and
specialized technical assistance and training services to small
communities and to those professionals that serve small communities and
rural areas.
Currently in the United States, there are no comprehensive regional
or national centers dedicated to helping a small community to prepare
for, respond to, and recover from natural or man-made emergencies or
terrorist acts which affect a community's water infrastructure. This
testimony outlines a model concept called Small Community
Infrastructure Protection and Sustainability (SCIPS) which addresses
this national need. Benefits to be gained by small communities include
improved emergency preparedness and reduced costs for restoring
infrastructure and services.
Need
In the last 5 years, the Federal Emergency Management
Administration (FEMA) has responded to more than 300 declared disasters
including natural events such as earthquakes, hurricanes, tornadoes,
and floods and man-made perils such as major fires, dispersal of
hazardous materials, and acts of terrorism. Floods are the most common
and widespread of all natural disasters except fires. The devastation
caused by hurricanes such as Katrina or Rita is widely publicized and
impinges on our consciousness. During major disasters, much of the
Nation's attention is focused on large population centers, but nearly
one-third of all Americans live in small, rural communities. Early
reports on Hurricane Katrina's aftermath indicated that nearly 1,000
drinking water and sewer systems were damaged and non-functional. Most
of the impacted systems were in sparsely populated rural communities,
lacking in emergency communications, and typically last in line for
assistance as responders bypassed them on the way to the bigger cities.
Advance preparation before an emergency is essential since federal
protocols require that communities should be able to manage with their
own resources for at least 24 to 72 hours before national programs
provide assistance. But many small communities lack the expertise,
information, and resources to install and operate appropriate water and
wastewater systems, prepare the mandated emergency response plans,
respond to emergencies when they occur, and recover afterwards. Small,
and even medium-sized communities, are the least able to afford
security and emergency preparedness enhancements to their water
infrastructure or to obtain such expertise. These communities require
assistance in all phases of preparing for and responding to
emergencies.
SCIPS Model
States and their respective small communities would benefit from
access to a national resource dedicated to providing comprehensive
water and wastewater assistance in all phases of emergency management.
The SCIPS model program can assist small communities nationwide to
maintain, protect, and replace water infrastructure resources damaged
during emergency events. A service organization, or center, based on
the SCIPS model draws upon experts in technology, public health, public
administration, law, and policy to make the best environmentally and
economically sound options available to small communities. SCIPS can
serve as a comprehensive, one-stop resource for regulatory and public
officials, assistance providers, utility operators/managers, and
homeowners who want unbiased and timely information on water and
wastewater infrastructure selection, maintenance, and replacement.
Community Preparation.--During non-emergency periods, the SCIPS
center focuses on community preparedness. Preparedness includes
development and dissemination of short- and long-term strategies
addressing threats to, and fostering the sustainability of, small
community water and wastewater infrastructure. SCIPS personnel will
provide customized training and education, technical assistance, and
R&D throughout the Nation. These services will promote and facilitate
asset management practices and emergency protocols as an integral part
of infrastructure protection and sustainability. The SCIPS center
increases the knowledge base of community officials, policy makers,
scientists, engineers, and others through a research, education, and
awareness campaign.
Disaster Response.--During a disaster, the SCIPS center is a
specialized resource that can be drawn upon at the request of national
and local officials for timely assistance. The SCIPS center has core
capabilities as an information center and technical assistance provider
through its extensive knowledge of the network of public and private
service providers across the Nation. SCIPS personnel are available to
answer questions via hotline phone and internet facilities, serve as a
communications resource among responders, and provide specialized
assistance by arranging for technology experts to visit the affected
communities. The SCIPS center assists communities in quickly restoring
services as effectively as possible based on the extent of the
disaster.
Recovery.--During the post-emergency recovery phase, the SCIPS
center assists communities in assessing damage, evaluating options for
infrastructure replacement, and providing technical services for the
replacement, installation and/or repair of infrastructure damaged
during the emergency. The SCIPS center provides communities access to
local, regional, and national experts. The Center offers a
comprehensive spectrum of assistance to small communities for recovery
of services, which enables a return of economic productivity to the
community in addition to restoring essential services and ensuring
public health.
Benefits
The benefits to small and rural communities and to the Nation from
establishing the SCIPS program include:
--Implementation of viable security improvements for water and
wastewater infrastructure, systems ``hardened'' to withstand
disaster and prevent damage from terrorism acts, and quicker
recovery of essential systems and services after catastrophic
events;
--Small communities that are better informed about preparing and
implementing water and wastewater emergency procedures;
--Communications plans for small community water and wastewater
treatment systems in coordination with other community
organizations;
--Improved rural community public health and a protected environment;
and,
--Cost savings at the Federal, State and local levels realized by
implementing infrastructure sustainability measures which
reduce economic losses during catastrophic events.
West Virginia University
West Virginia University is uniquely qualified to undertake
implementation of the SCIPS model. As a comprehensive land grant,
research extensive university, West Virginia University has the
necessary faculty expertise to address the spectrum of legal, health,
policy, research, and service requirements of the SCIPS model. Its
National Environmental Services Center has more than 26 years of
service to the Nation's small communities in the areas of drinking
water, waste water, homeland security, and educational and training
programs. The Center also has working relationships with relevant
Federal agencies, State offices, and technology experts through out the
country who would participate in response teams addressing emergencies
in their respective regions.
Recommendation
The lessons learned from the effects of Hurricane Katrina
demonstrate the need for assistance to small communities in the
protecting drinking water and wastewater infrastructure. We recommend
establishing a national center to provide the services outlined under
the SCIPS model.
The following language is suggested for the Subcommittee Report:
``The Managers provide $1 million for the Small Community
Infrastructure Protection and Sustainability program.'' We have not
received funding for this program previously.
______
Prepared Statement of the National Drinking Water Clearinghouse
Chairman Bennett and Members of the Subcommittee: Thank you for the
opportunity to offer testimony to the Subcommittee on Agriculture,
Rural Development and Related Agencies. We request an appropriation of
$2 million for fiscal year 2007 to continue the programs of the
National Drinking Water Clearinghouse [NDWC] under the Rural Community
Advancement Program [RCAP] in the USDA budget.
Introduction
My name is Richard Bajura, and I represent the National Drinking
Water Clearinghouse, which is located at West Virginia University in
Morgantown, West Virginia. My unit is home to a specialized suite of
programs that address the environmental needs of small and rural
communities. Our staff members have expertise in drinking water,
wastewater, solid waste management, security systems for small
community infrastructure, and emergency preparedness. We offer a
resource of information and specialized technical assistance and
training services to small communities and to those professionals that
serve small communities and rural areas. This testimony focuses on our
programs in drinking water infrastructure that are funded under RCAP.
Need for Federal Programs
Clean, safe drinking water and the effective treatment of
wastewater are critical to public and environmental health. For most of
us, it's easy to take water for granted. However, not that long ago,
most people didn't have indoor plumbing. According to U.S. Census
Bureau data, half of American homes in 1940 lacked complete plumbing
facilities (defined as hot and cold piped water, a bathtub or shower,
and a flush toilet). By 2002, EPA found that the number of homes having
complete plumbing facilities increased to 91 percent. Much of this
improvement can be attributed to Federal infrastructure investment. The
U.S. Department of Agriculture's Rural Utilities Service [RUS] has
provided more than $20 billion for water and wastewater projects since
1947. In spite of these improvements, however, 670,000 households (with
nearly 2 million people) lack access to water, sanitation, or both.
Safe, affordable water infrastructure is an investment in the economic
viability and public health of rural America.
Water Infrastructure Challenges
Over 50,000 water treatment systems serve the U.S. population, with
86 percent of these systems being classified as ``small'' systems
(serving fewer than 3,300 customers) and ``very small'' systems
(serving fewer than 500 customers). Because smaller systems have lower
revenues and fewer resources, they are more likely to have difficulty
meeting an increasing number of environmental regulations. Very small
systems are 50 percent more likely to incur violations than all other
system sizes. When the Safe Drinking Water Act was passed in 1974, 18
contaminants were regulated. By 2004, that number had grown to 86.
Another eight will be added by 2008.
While significant progress has been made, a number of challenges
confront communities as they try to safeguard public health. The very
nature of rural/small town America works against easy solutions to
providing essential water service. The cost of providing basic water
service (and other infrastructure) is often prohibitive because of
geographic isolation, low population density, social and cultural
diversity, and a lack of proper information. Twenty-five percent of our
Nation's drinking water utilities have insufficient revenues to fund
the full cost of providing service to customers. An equal percentage of
utilities have deferred maintenance due to insufficient funding.
Estimates show that during 2000-2019, the operation and maintenance
funding gap for our Nation's drinking water utilities could be as high
as $495 billion, and the capital funding gap could be as high as $267
billion.
In many communities, water distribution systems and wastewater
collection systems are 40 to 50 years old, with many dating back more
than a century. According to the American Society of Civil Engineers
(ASCE), U.S. drinking water systems are responsible for maintaining an
estimated 800,000 miles of water delivery pipelines. In the 2002 report
titled Clean Water and Drinking Water Infrastructure Gap Analysis, EPA
estimated that we need to invest $265 billion for drinking water
systems infrastructure through 2022. In the 2003 update to ASCE's
Report Card for America's Infrastructure, both drinking water and
wastewater were given a grade of ``D.'' The report suggests that,
without new investment, the progress made over the last 30 years is
threatened.
As a partial solution to addressing these challenges, the Technical
Assistance and Training [TAT] grants program under the USDA Rural
Community Advancement Program make it possible for small communities to
maximize their investments in water infrastructure through the use of
appropriate technology and sound management practices. The next
sections of this testimony focus on programs of the National Drinking
Water Clearinghouse which provide needed assistance to these
communities.
Information and Technical Assistance Services of the NDWC
For 15 years, the National Drinking Water Clearinghouse has helped
small and rural communities with their water infrastructure management
and utility security issues. The NDWC's services enable small
communities to provide clean water to their citizens and prevent
pollution. In this way the NDWC helps small and rural communities to
protect their public health, increase economic opportunity, and improve
their quality of life through providing adequate, safe, and economical
drinking water to their citizens.
The NDWC accomplishes its mission through a three-pronged approach.
First, the NDWC provides targeted assistance and quality information
for meeting regulatory compliance requirements and for optimizing
community water services. Second, the NDWC provides assistance and
strategic information to small communities to enable them to develop
sustainable water services that facilitate economic development. Third,
the National Drinking Water Clearinghouse provides information for
public awareness and increased stewardship of water resources to
educate community officials (who usually are part-time administrators)
and the general public.
The NDWC performs a range of assistance activities for small
communities. Telephone callers can obtain toll-free technical
assistance from our staff of certified operators, engineers, and
scientists. Our quarterly publication ``On Tap,'' a magazine about
drinking water treatment, financing, and management options helps
communities and small water systems to operate, manage and maintain
their facilities while keeping them financially viable. A comprehensive
Web site and databases with thousands of entries provide around the
clock access to contemporary information on small water systems.
Training sessions customized for small and rural areas,
teleconferences, and more than 400 free and low-cost educational
products provide people the instruction and tools they need to address
their most pressing drinking water issues.
These services are well received by small community officials and
service providers and should be continued. Unless the services of the
National Drinking Water Clearinghouse are available to provide
assistance to these communities regarding alternative technologies,
preparing grant proposals, and training the community officials and
service providers, the health of these communities will be jeopardized
and opportunities for economic development will be severely hampered.
We plan to use $1.5 million of our request to continue NDWC's
Information and Technical Assistance Services in fiscal year 2007. This
program receives funding from proposals submitted to the Technical
Assistance and Training [TAT] Grants Program in the RCAP budget line.
Special Services to Small Communities
In addition to the National Drinking Water Clearinghouse's
knowledge base and technical support, the NDWC is expanding its
assistance to small ``underserved'' communities through technical field
support. ``Underserved'' is a term that is used to characterize those
small and rural communities that, due to size and economic constraints,
have great difficulty assessing their environmental problems and
competing for funding. Examples would be communities such as we have in
West Virginia, Alaska, the sprawling Colonias bordering Mexico, Indian
reservations, and small communities in California, New York, and the
New England States.
The NDWC's funding under the Technical Assistance and Training
Grants program currently does not provide for direct ``on the ground''
services to underserved communities. A portion of our funding will be
used to develop a pilot program to honor requests for site-specific
technical support from underserved communities. This support gives
small and very small communities assistance through site assessments
and feasibility studies that they might not otherwise be able to access
for planning needed infrastructure improvements, their financing, and
management.
Communities often ask for help in assessing their water and
wastewater needs and options prior to contacting and retaining the
services of a private consulting firm. Through the pilot program, the
NDWC will be able to conduct site assessments and offer information and
education on technology options. In addition, NDWC staff will attend
and make presentations at community meetings concerning best technology
and management practices. Pre-engineering assessments conducted by NDWC
will enable communities to have a thorough knowledge of their water and
wastewater treatment needs and options, prior to retaining engineering
services. In this way they will be positioned to select technologies
that they can afford, and will be able to manage and maintain.
Funding for the special services to small communities programs will
enable assistance to be provided on location in communities throughout
the United States. We will use $500,000 of our appropriation for
special services to small communities.
For the past several years, the Managers of this Subcommittee have
inserted language in the committee report for Agriculture
Appropriations budget bill that recommended increases in our annual
funding to provide special services to underserved communities.
However, no specific amount of funding was earmarked through this
language, and, consequently, the National Drinking Water Clearinghouse
has not received funding from USDA to initiate the special services
program.
Request
In the Conference Report for the USDA appropriations for fiscal
year 2006 [H.R. 109-255], the Conference Managers directed spending in
the amount of $18,250,000 for the Technical Assistance and Training
[TAT] Grants Program in the RCAP budget line. For fiscal year 2007, we
request that the TAT program receive sufficient funding to maintain the
NDWC program and that of the total amount provided for fiscal year
2007, $2 million should be specifically earmarked for the programs of
the NDWC.
The following language is suggested for the USDA Subcommittee
Report: ``The Mangers provide $2 million to the National Drinking Water
Clearinghouse for information, technical assistance and special
services to small communities.''
A summary of our recent awards history is provided for reference.
FUNDING AWARDED TO THE NATIONAL DRINKING WATER CLEARINGHOUSE FOR
TECHNICAL ASSISTANCE AND TRAINING (TAT) PROJECTS UNDER THE RURAL
COMMUNITY ADVANCEMENT PROGRAM (RCAP) OF THE USDA BUDGET
------------------------------------------------------------------------
Federal fiscal
USDA funded grants year Award amount
appropriated
------------------------------------------------------------------------
National Drinking Water Clearinghouse... 2006 ( \1\ )
National Drinking Water Clearinghouse... 2005 $1,200,000
National Drinking Water Clearinghouse... 2004 1,157,000
National Drinking Water Clearinghouse... 2003 1,336,000
Technical Assistance for Rural 2003 510,000
Wastewater Management Entities (Project
II)....................................
National Drinking Water Clearinghouse... 2002 1,336,000
Technical Assistance for Rural 2002 500,000
Wastewater Management Entities (Project
II)....................................
.............. 6,039,000
------------------------------------------------------------------------
\1\ Amount pending.
Fiscal year 2007 Request: $2 million ($1.5 million for Information and
Technical Assistance Services and $0.5 million for Special Services to
Small Communities).
______
Prepared Statement of The Wildlife Society
The Wildlife Society appreciates the opportunity to submit
testimony concerning the fiscal year 2007 budgets for the Natural
Resources Conservation Service (NRCS), Animal Plant Health Inspection
Service (APHIS), and Cooperative State Research, Education and
Extension Services (CSREES). The Wildlife Society is the association of
almost 8,000 professional wildlife biologists and managers dedicated to
sound wildlife stewardship through science and education. The Wildlife
Society is committed to strengthening all Federal programs that benefit
wildlife and their habitats on agricultural and other private land.
Natural Resources Conservation Service
Wildlife Habitat Incentives Program (WHIP).--WHIP is a voluntary
program that provides technical and financial support to farmers and
ranchers to create high quality wildlife habitat. The Wildlife Society
recommends funding WHIP at $85 million in fiscal year 2007, the full
amount authorized by the 2002 Farm Bill.
Wetland Reserve Program (WRP).--WRP is a valuable program designed
to assist farmers and ranchers in protecting and restoring wetland
habitat. The Wildlife Society appreciates the continued targeting of
200,000 acres annually for enrollment in WRP. However, we recognize
that if the authorized level of 250,000 acres is not enrolled every
year, then enrollment must increase in future years to reach the
authorized level of 2,275,000 acres. Full WRP enrollment is needed if
the Administration intends to achieve the President's goal of no-net-
loss of wetlands. The Wildlife Society supports an enrollment target of
250,000 acres in fiscal year 2007.
Animal and Plant Heath Inspection Service
Wildlife Services.--Wildlife Services (WS), a unit of APHIS, is
responsible for controlling wildlife damage to agriculture,
aquaculture, forest, range, and other natural resources, for
controlling wildlife-borne diseases, and for controlling wildlife at
airports. Its activities are based on the principles of wildlife
management and integrated damage management, and are carried out
cooperatively with State fish and wildlife agencies.
The Wildlife Society is concerned by the Administration's proposal
to decrease funding in key activity areas for WS. The President's
fiscal year 2007 proposed budget directs an increase of $9,750,000 to
the WS Operations line item, while requesting $12,539,000 in deceases
to offset the proposed increases, for a net decrease of $2,789,000. In
essence, $9,750,000 is being redirected from existing activities to
support airport safety and assistance ($3,000,000), the oral rabies
vaccination program ($1,750,000), and wildlife disease monitoring and
surveillance ($5,000,000). While we are pleased that these activities
have gained presidential support, these new mandates, along with the
net decrease to the WS operational budget, will effect a $12,539,000
overall reduction to key activity areas. The Wildlife Society strongly
recommends that Congress restore, as an add-on, the proposed decrease
of $2,789,000 and provide increased funding of $9,750,000 for WS to
continue local program operations, as well as to support the airport
safety, rabies, and wildlife disease activities without redirecting
funds from other needed activities.
We understand the importance of safeguarding our Nation against
highly pathogenic avian influenza and applaud the added fiscal
resources to address this critical issue. The President's fiscal year
2007 budget proposal redirects $3.2 million for avian influenza
research as it relates to migratory birds. The Wildlife Society
recommends that Congress provide additional money to adequately fund
this and other important and associated research. Redirection of funds
for this program would have serious and, in many cases, terminal
effects on existing projects.
This program is also short $2.2 million because of previously
directed unfunded earmarks. These directed programs leave important
programs under-funded, like the Jack Berryman Institute for Wildlife
Damage Management at Utah and Mississippi State Universities; the
Logan, Utah Predator Research Station; the newly-established Texas A&M
University-Kingsville Research Field Station; important reproduction
inhibition research; and the National Trap Standards Development and
Testing Project.
Veterinary Services.--The Wildlife Society is deeply troubled by
the proposed cuts in several line-item budgets of USDA-APHIS-Veterinary
Services (VS). The protection of wildlife, livestock, and humans from
the threat of intentional and/or accidental introduction of disease
pathogens is very real and increases daily. The occurrence of Highly
Pathogenic Avian Influenza H5N1 in Asia, Europe, Africa, and the Middle
East, the introduction of Monkey Pox in 2003, the Exotic Newcastle
Disease event in California and other States in 2003-2004, and the
national spread of West Nile Virus starting in 1999 all indicate that
the introduction of diseases is rapidly increasing with no signs of
abating. In time of concern about national security and the need to
protect the citizens of the United States. from the introduction of
exotic diseases, it is imperative that funding for the agencies
responsible for detecting and prohibiting disease introductions be
adequately funded. The reemergence of several diseases, such as bovine
TB, Brucellosis, and others indicate that the efforts to control and
eradicate these diseases are not complete and APHIS must continue to
address the threats they pose to livestock, wildlife, and humans.
Additionally, VS continues to identify some diseases, such as
pseudorabies in feral pigs, as important economic drains on the economy
while sister agencies in USDA-APHIS propose to cut research into feral
hog control programs. The Wildlife Society strongly recommends that all
branches of USDA-APHIS coordinate budgets and activities for livestock
and wildlife disease surveillance, research, and control.
The Wildlife Society is very concerned about the proposed $1.405
million reduction in the Brucellosis Program budget. This appears ill-
advised given the fact that three States--Texas, Wyoming, and Idaho--
currently are without their brucellosis class-free status because of
recent outbreaks in domestic cattle herds. Because of its presence in
wild elk and bison, brucellosis in the Greater Yellowstone Area will be
especially difficult to eliminate and will require more, not less,
fiscal resources to accomplish. We recommend Congress restore
brucellosis funding to $11 million in fiscal year 2007, and that USDA-
APHIS-Veterinary Services continue to utilize the authorities and
expertise of the Greater Yellowstone Interagency Brucellosis Committee
to address domestic livestock interactions with wild elk and bison in
the region.
The Wildlife Society commends APHIS-Veterinary Services for
providing funding to state wildlife management agencies for Chronic
Wasting Disease (CWD) surveillance and management in free-ranging deer
and elk. Additionally, The Wildlife Society strongly supports APHIS'
efforts to eliminate CWD from captive cervids in order to eliminate the
risk of spread of the disease from these animals to free-ranging deer
and elk. The surveillance and monitoring efforts conducted by all 50
States during 2004 and 2005 would not have been possible without this
cooperative funding. Additionally, knowledge of the presence and
prevalence of CWD has been enhanced by this program. Without continued
funding, States will be unable to maintain the level of CWD
surveillance necessary to track the disease. The National CWD Plan
calls for additional management efforts to prevent the spread of CWD in
the United States. The finding of CWD in three additional States in
2005 (New York, West Virginia, and Kansas) emphasizes the need for
continued surveillance and monitoring. Without the State cooperative
agreement funding from Veterinary Services, this surveillance and
monitoring would not be possible. With additional States finding CWD or
bordering States with CWD, the amount of funding available will be
spread thinner, while the need for this activity increases. The
Wildlife Society strongly recommends Congress increase CWD funding to a
total of $30 million in fiscal year 2007, with $20 million designated
for cooperative agreements with the States for surveillance and
management of CWD in free-ranging cervids.
The Wildlife Society is encouraged by the additional funding
proposed in fiscal year 2007 for both low pathogenic and high
pathogenic avian influenza work. The potential for this disease to
spread to the North American continent and severely impact wildlife,
domestic poultry, and humans highlights the importance of continued
surveillance and monitoring of all zoonotic diseases. The fiscal year
2006 supplemental appropriation provided funding needed to begin to
address the avian influenza issue, both in the United States and
elsewhere. This effort must continue to ensure that America's citizens
and resources are protected. The Wildlife Society strongly supports the
proposed funding for low pathogenic avian influenza at $3.05 million
and for high pathogenic avian influenza at $51.7 million.
Cooperative State Research, Education, and Extension Service
Renewable Resources Extension Act.--RREA provides an expanded,
comprehensive extension program for forest and rangeland renewable
resources. The RREA funds, which are apportioned to State Extension
Services, effectively leverage cooperative partnerships at an average
of four to one, with a focus on private landowners. The need for RREA
educational programs is greater today than ever because of continuing
fragmentation of ownership, urbanization, the diversity of landowners
needing assistance and increasing societal concerns about land use and
the impact on natural resources including soil, water, air, wildlife
and other environmental factors. The Wildlife Society recommends that
the Renewable Resources Extension Act be funded at $30 million as
authorized in the 2002 Farm Bill.
McIntire-Stennis.--The proposed budget for fiscal year 2007
reflects a stable funding level for the McIntire-Stennis Cooperative
Forestry program. An alternative approach to the research formula base
programs would redirect 45 percent of both the Hatch Act and the
McIntire-Stennis Cooperative Forestry program funds to nationally
competitively awarded multi-state/multi-institutional projects. This
represents a significant departure from prior years. These funds are
essential to the future of resource management on non-industrial
private forestlands, as forest products are produced while conserving
natural resources, including fish and wildlife. As demand for forest
products grow, private-land forests will increasingly be needed to
supplement supplies, but trees suitable for harvest take decades to
produce (versus the single year in which crops such as corn and
soybeans can be harvested). In the absence of long-term and on-going
research, such as provided through McIntire-Stennis, the Nation could
easily become ill-suited to meet future forest-product needs.
Replacement of McIntire-Stennis funding with competitive grants will
leave long-term and stable forest research to chance. The Wildlife
Society strongly believes that the reasons for continuing the McIntire-
Stennis Cooperative Forestry program into the future are compelling and
urges Congress to increase the fiscal year 2007 budget to $25 million,
an amount more consistent with historic levels.
National Research Initiative.--National Research Initiative
Competitive Grants (NRI) are open to academic institutions, Federal
agencies, and private organizations to fund research on improving
agricultural practices, particularly production systems that are
sustainable both environmentally and economically, and to develop
methods for protecting natural resources and wildlife. Innovative grant
programs such as NRI help broaden approaches to land management, such
as integrating timber and wildlife management on private lands. The
Wildlife Society supports the administration request of $247 million
for National Research Initiative Competitive Grants.
Thank you for considering the views of wildlife professionals. We
look forward to working with you and your staff to ensure adequate
funding for wildlife conservation.
LIST OF WITNESSES, COMMUNICATIONS, AND PREPARED STATEMENTS
----------
Page
Advanced Medical Technology Association, Prepared Statement of... 293
American:
Farm Bureau Federation, Prepared Statement of................ 527
Indian Higher Education Consortium, Prepared Statement of.... 530
Public Power Association, Prepared Statement of.............. 534
Society:
For Microbiology, Prepared Statements of...............538, 540
Of:
Agronomy, Crop Science Society of America, and Soil
Science Society of America, Prepared Statement of.. 534
Civil Engineers, Prepared Statement of............... 536
Plant Biologists (ASPB), Prepared Statement of....... 543
Andrew, James M., Administrator, Rural Utilities Service,
Department of Agriculture, Prepared Statement of............... 432
Bennett, Senator Robert F., U.S. Senator From Utah:
Opening Statements of...................................1, 133, 297
Questions Submitted by.................................79, 173, 455
Bond, Senator Christopher S., U.S. Senator From Missouri,
Questions Submitted by......................................... 91
Bosecker, R. Ronald, Administrator, National Agricultural
Statistics Service, Department of Agriculture, Prepared
Statement of................................................... 33
Bost, Eric M., Under Secretary, Food, Nutrition, and Consumer
Services, Department of Agriculture............................ 297
Prepared Statement of........................................ 346
Statement of................................................. 345
Brownback, Senator Sam, U.S. Senator From Kansas, Questions
Submitted by..................................................94, 259
Burns, Senator Conrad, U.S. Senator From Montana, Questions
Submitted by................................................... 92
California Industry and Government Central California Ozone Study
Coalition, Prepared Statement of............................... 544
Christopherson, Charles, Chief Financial Officer, Office of the
Financial Officer, Department of Agriculture, Prepared
Statement of................................................... 36
Coalition:
On Funding Agricultural Research Missions (CoFARM), Prepared
Statement of............................................... 546
To Promote U.S. Agricultural Exports, Prepared Statement of.. 547
Cochran, Senator Thad, U.S. Senator From Mississippi, Prepared
Statement of................................................... 4
Collins, Keith, Chief Economist, Office of the Secretary,
Department of Agriculture......................................1, 297
Prepared Statement of........................................ 301
Statement of................................................. 299
Colorado River Basin Salinity Control Forum, Prepared Statement
of............................................................. 548
Combs, David M., Chief Information Officer, Office of the Chief
Information Center, Department of Agriculture, Prepared
Statement of................................................... 42
Conner, Charles, Deputy Secretary, Office of the Secretary,
Department of Agriculture...................................... 1
Consortium of Social Science Associations (COSSA), Prepared
Statement of................................................... 551
Council on Food, Agricultural, & Resource Economics (C-FARE),
Prepared Statement of.......................................... 551
Davis, Russell T., Administrator, Rural Housing Service,
Department of Agriculture, Prepared Statement of............... 430
Day, Lloyd C., Administrator, Agricultural Marketing Service,
Department of Agriculture, Prepared Statement of............... 391
Defenders of Wildlife, Prepared Statement of..................... 553
DeHaven, Dr. W. Ron, Administrator, Animal and Plant Health
Inspection Service, Department of Agriculture, Prepared
Statement of................................................... 397
Dorgan, Senator Byron L., U.S. Senator From North Dakota,
Questions Submitted by.......................................116, 283
Dorr, Thomas C., Under Secretary, Rural Development, Department
of Agriculture, Prepared Statement of.......................... 423
Duchesne County Water Conservancy District, Prepared Statement of 556
Durbin, Senator Richard J., U.S. Senator From Illinois:
Prepared Statement of........................................ 5
Questions Submitted by................................120, 287, 521
Florida State University, Prepared Statement of.................. 557
Food & Water Watch, Prepared Statement of........................ 558
Gleason, Jackie J., Acting Administrator, Rural Business-
Cooperative Service, Department of Agriculture, Prepared
Statement of................................................... 426
Gould, Eldon, Administrator, Risk Management Agency, Department
of Agriculture, Prepared Statement of.......................... 332
Harkin, Senator Tom, U.S. Senator From Iowa, Questions Submitted
by......................................................109, 277, 509
Hefferan, Dr. Colien, Administrator, Cooperative State Research,
Education, and Extension Service, Department of Agriculture,
Prepared Statement of.......................................... 442
Hentges, Eric J., Executive Director, Center for Nutrition Policy
and Promotion, Department of Agriculture, Prepared Statement of 352
Heuer, Kathleen, Chief Financial Officer and Associate
Commissioner for Management, Food and Drug Administration,
Department of Health and Human Services........................ 133
Interregional Research Project No. 4, Prepared Statement of...... 562
Jen, Dr. Joseph J., Under Secretary, Research, Education, and
Economics, Department of Agriculture, Prepared Statement of.... 434
Johanns, Hon. Mike, Secretary, Office of the Secretary,
Department of Agriculture...................................... 1
Prepared Statement of........................................ 11
Statement of................................................. 6
Johnson, Senator Tim, U.S. Senator From South Dakota, Questions
Submitted by................................................... 123
Kelly, James Michael, Deputy General Counsel, Office of the
General Counsel, Department of Agriculture, Prepared Statement
of............................................................. 47
Klurfeld, Roger J., National Appeals Division, Department of
Agriculture, Prepared Statement of............................. 33
Knight, Bruce I., Chief, Natural Resources Conservation Service,
Department of Agriculture, Prepared Statement of............... 339
Kniplings, Dr. Edward B., Administrator, Agricultural Research
Service, Department of Agriculture, Prepared Statement of...... 438
Kohl, Senator Herb, U.S. Senator From Wisconsin, Questions
Submitted by.................................................103, 262
Lambert, Charles, Acting Under Secretary, Marketing and
Regulatory Programs, Department of Agriculture................. 297
Prepared Statement of........................................ 384
Statement of................................................. 383
Lasseter, Teresa C., Administrator, Farm Service Agency,
Department of Agriculture, Prepared Statement of............... 321
Link, James E., Administrator, Grain Inspection, Packers and
Stockyards Administration, Department of Agriculture, Prepared
Statement of................................................... 405
Masters, Dr. Barbara J., Administrator, Food Safety and
Inspection Service, Department of Agriculture, Prepared
Statement of................................................... 373
McConnell, Senator Mitch, U.S. Senator From Kentucky, Questions
Submitted by................................................... 259
Metropolitan Water District of Southern California, Prepared
Statement of................................................... 565
Midwest Advanced Food Manufacturing Alliance (MAFMA), Prepared
Statement of................................................... 567
Moore, Terri Teuber, Director of Communications, Office of
Communications, Department of Agriculture, Prepared Statement
of............................................................. 40
National:
Association of State Foresters, Prepared Statements of.....567, 625
Coalition for Food and Agricultural Research, Prepared
Statement of............................................... 546
Commodity Supplemental Food Program Association, Prepared
Statement of............................................... 575
Cooperative Business Association, Prepared Statement of...... 572
Fish and Wildlife Foundation, Prepared Statement of.......... 583
Organic Coalition, Prepared Statement of..................... 586
Potato Council, Prepared Statement of........................ 590
Rural Telecom Association, Prepared Statement of............. 592
Turfgrass Evaluation Program, Prepared Statement of.......... 581
WIC Association, Prepared Statement of....................... 594
New Mexico Interstate Stream Commission, Prepared Statement of... 600
Offutt, Susan E., Administrator, Economic Research Service,
Department of Agriculture, Prepared Statement of............... 446
Organic Farming Research Foundation (OFRF), Prepared Statement of 604
Organization for the Promotion and Advancement of Small
Telecommunications Companies, Prepared Statement of............ 608
Pellett, Nancy C., Chairman and Chief Executive Officer, Farm
Credit Administration, Department of Agriculture, Prepared
Statement of................................................... 26
Penn, J.B., Under Secretary, Farm and Foreign Agricultural
Services, Department of Agriculture............................ 297
Prepared Statement of........................................ 315
Statement of................................................. 313
Pickle Packers International, Inc., Prepared Statement of........ 609
Raymond, Richard, M.D., Under Secretary, Food Safety, Department
of Agriculture................................................. 297
Prepared Statement of........................................ 362
Statement of................................................. 359
Red River Valley Association, Prepared Statement of.............. 615
Rey, Mark, Under Secretary, Natural Resources and Environment,
Department of Agriculture...................................... 297
Prepared Statement of........................................ 337
Statement of................................................. 336
Romero, Annabelle, Deputy Assistant Secretary for Civil Rights,
Office of Assistant Secretary for Civil Rights, Department of
Agriculture, Prepared Statement of............................. 19
Salazar, Roberto, Administrator, Food and Nutrition Service,
Department of Agriculture, Prepared Statement of............... 354
Society:
For:
Animal Protection Legislation, Prepared Statement of..... 619
Women's Health Research and Women's Health Research
Coalition, Prepared Statement of....................... 622
Of American Foresters, Prepared Statement of................. 625
Specter, Senator Arlen, U.S. Senator From Pennsylvania, Questions
Submitted by..................................................89, 489
Steele, W. Scott, Budget Officer, Office of the Secretary,
Department of Agriculture...................................... 1
Sundlof, Steve, Director, Center for Veterinary Medicine, Food
and Drug Administration, Department of Health and Human
Services....................................................... 133
Terpstra, A. Ellen, Administrator, Foreign Agricultural Service,
Department of Agriculture, Prepared Statement of............... 327
The Humane Society, Prepared Statement of........................ 559
The National Drinking Water Clearinghouse, Prepared Statement of. 640
The Nature Conservancy, Prepared Statements of.................597, 625
The Wildlife Society, Prepared Statement of...................... 642
Thomas, Peter J., Deputy Assistant Secretary, Department of
Administration, Department of Agriculture, Prepared Statement
of............................................................. 20
Turman, Richard, Deputy Assistant Secretary for Budget,
Technology, and Finance, Food and Drug Administration,
Department of Health and Human Services........................ 133
U.S. Apple Association, Prepared Statement of.................... 627
University of Southern Mississippi and the Mississippi Polymer
Institute, Prepared Statement of............................... 633
Upper Mississippi River Basin Association, Prepared Statement of. 636
US Marine Shrimp Farming Consortium, Prepared Statement of....... 601
USA Rice Federation, Prepared Statement of....................... 630
von Eschenbach, Hon. Andrew C., Acting Commissioner, Food and
Drug Administration, Department of Health and Human Services... 133
Prepared Statement of........................................ 136
Statement of................................................. 134
West Virginia University, Prepared Statement of.................. 638
Wyoming State Engineer's Office, Prepared Statement of........... 626
SUBJECT INDEX
----------
DEPARTMENT OF AGRICULTURE
Page
Accelerating Conservation Implementation......................... 339
Additional Committee Questions................................... 78
Administrative Support........................................... 326
Agricultural
And Rural Development Information System..................... 447
Estimates.................................................... 33
Marketing Service............................................ 387
Trade........................................................ 511
Agriculture Buildings and Facilities............................. 21
Air and Water Quality Issues..................................... 419
Alternative Fuels..............................................108, 415
AMS:
Programs..................................................... 391
2007 Budget Request.......................................... 388
Animal and Plant Health Inspection Service....................... 385
Blackbird Control............................................ 118
2007 Budget Request.......................................... 386
Animal:
Health and Disease Research.................................. 99
Identification..............................................79, 467
Avian:
Flu.......................................................... 475
Influenza....................................70, 114, 411, 469, 496
Beef:
Exports to Japan.............................................64, 75
Imports and BSE.............................................. 119
Beginning Farmers and Ranchers................................... 94
Biomass Research and Development Grants.......................... 430
Bovine Spongiform Encephalopathy................................. 412
BSE--Japanese Exports..........................................106, 107
Budget........................................................... 446
Construction Authority....................................... 464
Request....................................................323, 330
Summary.................................................. 397
Building Strong Accountability Measures.......................... 338
Business and Industry Guaranteed Loan Program.................... 427
Capital Security Cost Sharing Program............................ 455
Census of Agriculture............................................ 34
Central Administration Funding................................... 71
Child Nutrition Programs.......................................350, 356
Civil Rights..................................................... 60
Classical Chinese Garden......................................... 80
Codex............................................................ 464
And Trade Capacity Building.................................. 456
Commodity:
Credit Corporation........................................... 323
Program Elimination.......................................... 459
Supplemental Food Program...........66, 90, 104, 131, 351, 358, 416
Common Computing Environment..................................... 110
Community Programs............................................... 432
Condition of the Farm Credit System.............................. 31
Conservation..................................................... 16
Operations................................................... 341
Security Program............................................. 343
Customer Service Results Survey.......................... 338
Consumer Data and Information System............................. 447
Continuity of Operations Planning................................ 22
Cooperative:
Research Agreements.......................................... 428
Services..................................................... 500
Corporate Activities............................................. 30
Country of Origin Labeling.....................................125, 392
County Office Restructuring...................................... 489
Crop Insurance..................................................14, 111
Cross Cutting Trade Negotiations and Biotechnology Resources..... 86
CSFP............................................................. 492
Caseload..................................................... 521
CSREES Renewable Energy Research................................. 479
Current Activities and Issues.................................... 47
Customers, Partners, and Stakeholders............................ 454
Dairy:
Assistance................................................... 89
Policy....................................................... 65
Department Management............................................ 18
Departmental Administration Direct Appropriation................. 21
Dietary Guidelines for Americans Establish Federal Nutrition
Policy......................................................... 352
Disaster Assistance............................................116, 120
Discretionary Funding............................................ 341
eGovernment Solutions............................................ 409
Electric Program................................................. 433
Electronic Government............................................ 44
Emergency Response to Hurricane Katrina.......................... 344
Emphasis on Energy............................................... 340
Energy........................................................... 13
Costs........................................................ 65
Ensuring Low Income Persons Have Access to Food.................. 347
Enterprise:
Architecture................................................. 46
Human Resources System....................................... 23
Environmental Quality Incentives Program......................... 343
EPA Regulations.................................................. 92
ERS Contributions to Mission Area Goals.......................... 448
Examination Programs for FCS Banks and Associations.............. 27
Excess Personal Property Program................................. 25
Export Programs.................................................. 330
Faith-based and Community Organizations Outreach................. 355
Farm and Ranch Lands Protection Program.......................... 344
Farm:
Bill Authorized Programs..................................... 343
Commodity Program Spending................................... 13
Loan Programs.........................................316, 325, 511
Program:
Delivery................................................. 14
Funding.................................................. 102
Service Agency............................................... 315
Office Realignment....................................... 80
Subsidies.................................................... 419
Farmers' Market Nutrition Program................................ 494
Federal:
Agricultural Mortgage Corporation............................ 32
Biobased Products Procurement Preference Program............. 24
Grain Inspection Service..................................... 407
Seed Act Program............................................. 395
State Marketing Improvement Program.......................... 395
Financial:
Assistance Programs Allocation Formulas...................... 522
Management System............................................ 84
Fiscal Year:.....................................................
2005 Accomplishments......................................... 27
2005 Highlights.............................................. 397
2007:
Budget................................................... 33
Key Outcomes............................................. 19
Objectives............................................... 19
515 Housing Program.............................................82, 472
Request..........................20, 32, 41, 62, 371, 394, 402, 424
Food:
Aid.......................................................... 114
And:
Agriculture Defense Initiative........................... 12
Nutrition Division....................................... 48
Defense--Food Emergency Response Network..................... 462
Protection Program........................................... 395
Safety......................................................15, 115
Budget Trends............................................ 104
Inspectors............................................... 499
Stamp Program..............................................349, 356
Participation................................................ 459
Foreign:
Agricultural Service......................................... 318
Office Closures.......................................... 123
Staffing Levels.......................................... 74
Service Performance Pay...................................... 86
Forest Service Funding........................................... 83
Fruit and Vegetable Pilot Program................................ 495
Funding Sources.................................................. 385
General Law Division............................................. 58
Government Ethics Program........................................ 23
Grain:
Exports Forecasting.......................................... 77
Inspection, Packers and Stockyards Administration.....120, 389, 520
OIG Audit.................................................... 105
2007 Budget Request.......................................... 390
Grants to Assist Minority Producers.............................. 428
Grassland Reserve Program........................................ 343
Grazing Land Conservation Initiative............................. 418
Hatch Act........................................................ 97
Hazardous Materials Management................................... 26
Helping People Help the Land..................................... 340
Horse Slaughter.................................................. 94
User Fees.................................................... 103
Human Capital Management........................................23, 355
Strategic Plan............................................... 340
Humane:
Activities Tracking System................................... 499
Slaughter.................................................... 465
Hurricane Assistance............................................. 471
Impact of Texas Eligibility System on Vulnerable Groups.......... 517
Implementation of Texas Integrated Eligibility Contract.......... 516
Imports:
From Canada.................................................. 124
Of Japanese Beef............................................. 123
Information Security............................................. 44
Intermediary Relending Program................................... 428
International Affairs and Commodity Programs Division............ 47
IT Management.................................................... 46
Land Grant University Funding.................................... 95
Legislation Division............................................. 60
Legislative Proposals in the Budget.............................. 79
Litigation Division.............................................. 59
Livestock Protection Program..................................... 90
Major Activities:
And Goals.................................................... 328
Of the National Agricultural Statistics Service (NASS)....... 34
Managing Prudently and Efficiently............................... 348
Mandatory Commodity Programs..................................... 83
Market:
Access Program.............................................510, 524
Development.................................................. 393
News......................................................... 392
Marketing:
Agreements and Orders User Fees.............................. 397
Regulatory and Food Safety Programs.......................... 49
Services..................................................... 392
McIntire-Stennis Forestry Grants................................. 98
Meat and Poultry Import Requirements............................. 417
Microbiological Data Program Termination......................... 396
Milk Income Loss Contract........................................ 67
Minority Outreach................................................ 460
Mission................................................33, 391, 446
Of the Farm Credit Administration............................ 27
Mississippi River Transportation Infrastructure.................. 76
MRP Initiatives.................................................. 385
Multi-Family Housing Programs.................................... 430
Mushroom Spawn................................................... 490
MyPyramid Serves as Premier Teaching Tool........................ 353
National:
Agro-Forestry Center......................................... 91
Animal Identification System...........................94, 102, 518
Finance Center:
Data Center Operations................................... 82
Status................................................... 81
Institute for Food and Agriculture........................... 91
Organic Program.............................................. 394
Veterinary Medical Services Act........................83, 117, 495
Natural Resources................................................ 55
New:
Strategic Plan............................................... 340
User Fees.................................................... 396
Uses Expo for Biobased Products.............................. 94
Non-Ambulatory Disabled Cattle................................... 107
NSA Grants....................................................... 491
Nutrition:
Assistance................................................... 18
Programs Administration....................................351, 359
Office of:
Civil Rights................................................. 88
Program Funding.............................................. 89
The Under Secretary for Marketing and Regulatory Programs...80, 469
Organic:
Agriculture.................................................. 508
Research...................................................473, 507
Organization..................................................... 405
Other Appropriated Programs...................................... 325
Packers and Stockyards Program................................... 405
Partnerships..................................................... 393
Pathogenic Avian Influenza (AI).................................. 12
Personnel and Information Security............................... 22
Pest Management Alternatives..................................... 489
Pesticides....................................................... 93
Physical Security................................................ 21
Planned use of Pandemic Influenza Funds.......................... 71
Premise Identification........................................... 468
President's Fiscal Year 2007 Budget.............................. 337
Procurement Policy............................................... 24
Program Highlights............................................... 430
Promoting Healthful Diets and Active Lifestyles.................. 348
Proposed:
Increase for Buildings and Facilities........................ 442
Operating Increases.......................................... 442
Program:
Decreases................................................ 442
Increases and Redirections............................... 439
Reprogrammings............................................... 442
Protecting the Homeland.......................................... 410
Provincial Reconstruction Team................................... 85
Public:
Law 480 Titles I and II...................................... 413
Opinion on Agricultural Policy............................... 421
Rapid Watershed Assessments...................................... 458
Real Property Asset Management................................... 25
Reducing the Federal Deficit................................. 66
REE Fiscal Year 2007 Initiatives................................. 437
Regulatory Activity.............................................. 29
Renewable Energy.................................................64, 68
Fuels........................................................ 93
Loan Guarantee Program....................................... 429
Research..................................................... 477
Rental Assistance................................................ 505
Research......................................................... 17
Budget....................................................... 116
Resource Conservation and Development Program........115, 125, 342, 457
Results Achieved Recently........................................ 37
Resuming Beef Exports to Japan................................... 92
Review of Stakeholder Response to the Fiscal Year 2006 Budget as
Background for Cooperative State Research, Education, and
Extension Service (CSREES) Fiscal Year 2007 Budget Proposal.... 96
Risk Management Agency.........................................317, 509
Crop Insurance............................................... 455
Rural:
Business:
And Cooperative Programs................................. 426
Enterprise Grant Program/Rural Business Opportunity Grant
Program................................................ 429
Cooperative Development Grant Program........................ 428
Development..................................................16, 53
Grants................................................... 516
Economic Development Loan and Grant Programs................. 429
Housing and Community Facilities Programs.................... 425
Utilities Programs........................................... 424
Voucher Program.............................................. 472
Section:
32........................................................... 393
515.......................................................... 503
9002 Biobased Products....................................... 516
9006 of the 2002 Farm Bill................................... 513
Seniors' Farmers Market Nutrition Program (SFMNP)................ 358
Sericea Lespedeza................................................ 103
Service Center Modernization Initiative--(SCMI).................. 43
Simplified Summer Food Program.................................491, 521
Single Family Housing Programs................................... 431
Small:
And Disadvantaged Business Utilization....................... 25
Farm/Direct Marketing........................................ 106
Special Supplemental:
Nutrition Program for Women, Infants and Children (WIC)...... 357
Program for Women, Infants, and Children (WIC)--Food Package. 460
Legislative Proposal...................................459, 491
Specialty Markets................................................ 414
Standardization.................................................. 495
Standards User Fees.............................................. 396
State Meat Inspection Program.................................... 119
Strategic Planning:
And Performance Plans........................................ 30
For the Future............................................... 339
Streamlining for Conservation Gains.............................. 338
Strengthening America's Communities Initiative................... 503
Summary of Personnel Supported With:
Animal Health and Disease Research Program Funds in Fiscal
Year 2004.................................................. 101
Hatch Act Funds in Fiscal Year 2004.......................... 98
McIntire-Stennis Funds....................................... 99
Telecommunications Program....................................... 433
The Challenge of Improper Payments............................... 355
The Emergency Food Assistance Program (TEFAP)..................351, 358
The USDA Loan Program............................................ 502
Trade...........................................................14, 113
Transportation................................................... 393
Trends Continue to Show Need for Revised Nutrition Guidance and
Educational Tools.............................................. 352
2007:
Budget....................................................... 12
Farm Bill.................................................... 118
Request...................................................... 410
USDA:
Fiscal year 2007 Information Technology Budget Summary....... 42
Service Centers.............................................. 109
Share of Budget Cuts......................................... 79
Use of Biofuels.................................................. 24
User Fees........................................................ 411
Value-Added Producer Grants...................................... 117
Program...................................................... 427
Vision........................................................... 424
Vouchers......................................................... 505
Water and:
Environmental Programs....................................... 434
Sewer Grants................................................. 506
Wastewater................................................... 473
Watershed:
And Flood Prevention Operations.............................. 342
Project Backlog.............................................. 458
Rehabilitation............................................... 342
Surveys and Planning......................................... 342
Weather-related Disaster Assistance.............................. 73
Web Based:
Soil Survey.................................................. 341
Supply Chain Management System (WBSCM)....................... 396
Wetlands Reserve Program......................................... 343
WIC.............................................................. 350
Food Package................................................. 521
Legislative Proposal......................................... 79
Management Information System................................ 492
Moratorium................................................... 493
Reauthorization Legislative Proposal......................... 494
Wildlife:
Habitat Incentives Program................................... 344
Services..................................................... 495
World Trade Organization.......................................420, 511
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Food and Drug Administration
Additional Committee Questions................................... 173
Advisory Committees.............................................. 289
Avian:
Flu.......................................................... 265
Influenza.................................................... 159
Bioterrorism..................................................... 278
Bovine Spongiform Encephalopathy...............................161, 168
Feed Ban..................................................... 247
Rule and Harmonization With Canada........................... 164
Clinical Trials.................................................. 259
Color Certification.............................................. 256
Critical Path:
Initiative................................................... 221
To Personalized Medicine..................................... 158
Dietary:
Health Supplements Education Act............................. 169
Supplements.................................................. 287
Drug:
Advertising.................................................. 273
Efficacy Study Implementation (DESI) Monograph System........ 255
Labeling..................................................... 292
Safety....................................................... 251
Oversight Board.......................................... 166
Early Food Safety Evaluation..................................... 280
Existing Programs................................................ 260
FDA Detailees.................................................... 244
Field:
Inspectors................................................... 166
Staff........................................................ 262
Food:
And Nutrition FTE..........................................169, 169
Contact Substances........................................... 257
Defense....................................................254, 274
Imports...................................................... 280
Recall....................................................... 281
FoodNet.......................................................... 283
Gelatin Capsules for Dietary Supplements......................... 172
Generic Drug:
Approval..................................................... 270
Backlog...................................................... 156
Drugs.................................................155, 159, 279
User Fees/Citizen Petitions.................................. 269
Health Certificates for Gelatin Capsules......................... 173
Human Tissue Safety.............................................. 253
Import Inspection................................................ 251
Imported Prescription Drugs...................................... 283
Medical Device User:
Fee and Modernization Act (MDUFMA)........................... 173
Fees.......................................................164, 220
Medical Imaging Drugs............................................ 256
Methylmercury..................................................282, 290
Microbiological Data Program..................................... 277
National Institute for Pharmaceutical Technology and Education... 259
New Drug Applications............................................ 258
Openness of Drug Safety Oversight Board.......................... 167
Pandemic Influenza.............................................154, 247
Personnel Manual................................................. 245
Post-Marketing Studies........................................... 276
Postmarket Safety Issues......................................... 220
Poultry Litter and BSE Transmission.............................. 162
Proposed User Fees............................................... 253
Reuse of Single-Use Devices...................................... 243
Strategic Redeployment.........................................144, 172
Sunscreen........................................................ 278
Monographs................................................... 258
Unified Financial Management System.............................. 170
Uniform Food Safety.............................................. 276
Women's Health................................................... 288